Shopify Q4 2020 Earnings Shows Growth But Still Strategy Concerns
Shopify Reported Q4 Earnings Today And Here's a Few Things I Noticed
Don't get me wrong, Shopify is an amazing company and solution, but strategically they need some help.
* The company has some revenue headwinds in 2022 related to COVID annualizing, and developer revenue changes ($1M credit) annualizing.
* No real discussion about Oxygen and Hydrogen initiatives which leaves you feeling that they are not core to what Shopify is doing -- I believe that is probably right since likely only higher-end Shopify customers need this.
* I seriously have trouble consistently following Tobi's train of thought some times. My friend had a great analogy - he is like this uber-architect refactoring Shopify as if it were a giant codebase.
Unfortunately that does not necessarily lead to the world's best operator.
* In Q4, Shopify lost $500M on its investments (likely GLBE and Affirm) as those stocks declined in the last 6 months and year significantly. Perhaps they should stop playing the stock market and spin out their investments into a separate fund or something? Seems like it would make sense.
Lots of SFN discussion. Lots of seriously awkward SFN discussion as someone who spends a lot of time watching #supplychain
* Shopify Fulfillment Network got some revisionist history going on.
The word of the day is "prototype". This is one of the first times I've heard this term since 2019. So the SFN sales team has been selling a prototype to its merchants in the past few years? I'm sure those merchants would have been happy to learn this sooner.
* It's notable Tobi stays away from SFN questions and Harley answers them, although his logistics answers are so much word salad.
* The only reasonable answer on SFN in the call came from the CFO.
"We will operate fewer and bigger facilities at the backbone". "Last mile and middle mile will be partners."
* I say this again, "who is running SFN?"
* Shopify building its own WMS. This doesn't seem that great of an approach.
* Is the strategy to CONVERT all merchants from their existing warehouses and 3PLs to Shopify SFN? Or to only sign up new entrepreneurs? NO MENTION. The strategy seems only workable for complete newbies to eCommerce.
Rather than going from "prototype to build" it seems like they are going from "smaller prototype to bigger prototype" in my mind.
* Lots of Shop Pay growth - will be the growth engine for the company going forward. However lower margin than subscription revenue.
* Lots of Shop App discussion but little specifics. Curated lists of products? Who is driving a significant % of their GMV from Shop App?
Why are consumers motivated to keep coming back to shop here?
* No mention that Amazon is likely coming soon to try and take their lunch money, and how they are positioned for that.
