A few quick notes from Shopify Q4 2020 earnings

1. Shopify is increasingly a payments company. Merchant Solutions is now 2/3rd revenue (% GMV - payments/capital) vs 1/3 subscription revenue (monthly minimums). Is this trend good for merchants? Not necessarily. It means they don't need to invest as much in the platform to power their growth. Shop Pay, Capital, Balance, Installments all give me the impression their payments team is the golden goose here and getting the most. Is there an opening here for BigCommerce and other newer startups who stick to their knitting? Perhaps.

2. Shopify Fulfillment Network is not scaling anytime soon, and likely won't make any money for them. "Product-market fit" -after 18 months - not yet ready?

3. For all the discussions about Amazon vs Shopify, the narrative is not driven by Amazon. It's driven by Shopify. Shopify mentioned that aggregate US GMV would put Shopify as the #2 in US eCommerce in the US. (about 5x less than Amazon it says)

4. Tobi gave an odd answer on Shop App. "Goal is to increase seller LTV and not optimize for transactions." What is happening here? Not a marketplace ;-). Tobi threw cold water on the "obvious play with Shop app we will not follow" in which I think he was directly referencing a marketplace play.

Tobi reinforced (regarding Shop App) that they are intensely focused on merchants. To me, this means they are not intensely focused on buyers or becoming a merchant aggregator/marketplace. I'll be honest, I agree with him. I think not only is it not their strength (they are not merchants themselves), it also would directly harm their relationships with some of their merchants.

Jason Orvyn added some interesting thoughts on this: “Becoming a consumer-facing marketplace (through Shop vs through Allbirds) would really go against what Shopify is doing best and more importantly, what brands want. Brands already spend so much money advertising to the customer and attempting to get that customer to shop directly with their brand (.com) - competing with that would turn Shopify from an ally to an enemy (somewhat Akin to Amazon in some ways I think). The only benefit I could see would be for small brands to get “featured” on Shop App but I think even that is a slippery slope that ultimately becomes pay to play.” I agree - this is a smart take.

If you want to see them for yourself, here’s Shopify’s Q4 earnings report and investor presentation.