Described as "a hand-to-hand combat with Amazon", Shopify has had its moment of glory in the past year. But with its rapid growth, some troubles have appeared.
According to the Financial Times, a report released by Fakespot, found that after surveying 124,000 Shopify's online shops, 21% of them posed some degree of risk to consumers, including not shipping after obtaining user information, copyright infringement, selling counterfeits, and extremely poor customer service.
"While these offending merchants are only a small portion of our base of over 1 million merchants, we are aware that this can damage the overall service experience and therefore we take it very seriously." An official Shopify spokesperson responded by saying that the company has hired multiple teams to address the issue.
Who's to blame for thousands of shop closures?
Some are even calling 2020 the year of Shopify's growth - In the second and third quarters, Shopify's revenue grew by 97% and 96% respectively; the number of global merchants broke the million mark; and its market capitalisation has more than tripled since March 2020 and is now over $140 billion.
Currently, it is reported that 1 million small and medium-sized merchants worldwide pay Shopify a basic monthly fee of $29 and a 2.9% credit card fee related to a single order amount, and around 7,100 merchants subscribe to the Shopify Plus feature for thousands of dollars per month (which accounts for a quarter of Shopify's monthly recurring revenue).
This is one of the core forces of the "anti-Amazon coalition" that has also managed to alert Amazon. But Shopify versus Amazon is, as Shopify founder Lütke once described it, "If Amazon is trying to build an empire, Shopify is trying to arm the 'rebels'."
Shopify is targeting merchants who have "escaped" from the Amazon empire and who simply can't or don't want to step into it, most of whom are more personalised small and medium-sized sellers. After all, with the high costs of the Amazon platform (high charge-back rates + increasing advertising fees + FBA and other related services), the profit margins of small and medium-sized merchants are constantly being squeezed. And amid the increasingly fierce competition on the platform, it is difficult for merchants who do not have a price advantage and are not at the top of their listings to gain the favour of consumers.
In response to FakeSpot's report, an official Shopify spokesperson said that this is in fact an industry-wide problem and said that Shopify has already closed thousands of shops in 2020 and will also be taking new initiatives in real time to combat similar problems on the platform.
For Shopify, the diversity of merchants is unavoidable, and as the volume grows, so does the difficulty of controlling it.
【Source text：by report】
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