Amazon vs. Shopify: What the tech giant’s latest deal says about its larger retail ambitions

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When Jeff Bezos named e-commerce software company Shopify as an example of Amazon’s growing competition in his testimony to a U.S. House antitrust subcommittee last year, e-commerce consultant and former Amazon seller Jason Boyce wasn’t buying it. It struck Boyce then as a calculated claim, a false equivalency to get regulators to back off by overstating Amazon’s competitive threats.

“When he brought it up, I’m like, this is a joke,” Boyce recalls. “Shopify doesn’t have a front door. They’re not a marketplace. They have a small percentage of the total online market.”

This week’s news convinced him otherwise.

Amazon’s acquisition of Selz, a 7-year-old startup that helps entrepreneurs sell products online, signals its ambitions to go beyond its own e-commerce platform to help power standalone third-party retail sites, moving into a new area of online commerce and going head-to-head with the likes of Shopify and BigCommerce.

The implications for Amazon and the broader retail economy are immense.

“They want to capture a greater and greater share of the internet itself,” Boyce says. “They are moving full-steam ahead towards further and greater world domination. That’s what we can read into this latest headline.”

Boyce is our guest commentator on this episode of the GeekWire Podcast. He’s the co-founder and CEO of Avenue7Media, and the co-author of The Amazon Jungle: The Seller’s Survival Guide for Thriving on the World’s Most Perilous E-Commerce Marketplace. A former U.S. Marine, he was an Amazon seller for 17 years, before finally giving up after Amazon repeatedly launched products that competed with his, as detailed in the House Judiciary Committee’s antitrust subcommittee report last year (page 279).

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Listen to the episode above, or subscribe to GeekWire in any podcast app, and continue reading for key takeaways.

How Amazon and Shopify stacked up historically: Up to this point, it was hard a stretch to Shopify and Amazon as direct competitors.

  • “It’s a little bit of a false equivalency, Shopify and Amazon,” Boyce says. “You don’t go to to buy a product. In that regard, we’re talking about zebras vs. an elephant, they’re different animals entirely.”
  • Another big difference: Shopify focuses on merchants as its customers, while Amazon is legendary for putting the customer above all else, and owes much of its success to this approach.
  • Amazon ran a Shopify-like service called Webstore but shut it down in 2015. 

What’s different now: Shopify’s growth and Amazon’s ambitions are putting the companies on a collision course.

  • Shopify revenue increased 86% in 2020, to more than $2.9 billion. That’s still a fraction of the $386.1 billion pulled in by Amazon, but Shopify’s growth rate is significant, demonstrating the potential of powering standalone third-party e-commerce stores. This is clearly catching Amazon’s eye.
  • Amazon is also in a much different place than it was six years ago, having built up its fulfillment and last-mile delivery operations to better support (and make money from) third-party sellers, while also building up its advertising business to better support (and make money from) third party sellers.
  • Revenue from Amazon’s third-party seller services rose 57% in the holiday quarter to $27.3 billion, making up 21% of the company’s total revenue.
  • “Even though they’re a little bit behind in this space, Amazon comes at this with an enormous advantage that will take tens of billions of Shopify investor dollars to solve,” Boyce says. “If I’m Shopify, I’m much more nervous than I was before this announcement came out. Much more nervous.”

Amazon tech in physical retail stores: Amazon isn’t just involved in online commerce; the company operates its own physical stores. Shopify’s platform already extends to point-of-sale terminals for merchants with physical stores. It’s not a stretch to imagine Amazon ultimately extending its own technology into third-party physical retail stores, perhaps with a more comprehensive solution, including the technology that powers its Amazon Go cashier-less grocery and convenience stores

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What this means for retailers: The ability to run a standalone e-commerce site, while leveraging Amazon’s fulfillment infrastructure and advertising infrastructure, will no doubt be enticing to many retailers. But it’s a double-edged sword. Amazon maintains that it doesn’t use individual seller data to inform its own product decisions, but based on his own experience as a seller, Boyce advises caution in giving the company even more data, competitive insights, and market power.

Big picture: Amazon “has put themselves into this position of judge, jury and executioner for literally the livelihood of millions of small businesses,” and it needs to be held accountable, especially as it extends its reach, Boyce says.

“Amazon wouldn’t be what it is today without the hard work, the grit, the capital, the product knowledge of the third party seller, of which there are millions, and there will be millions more,” he says. “The sellers deserve a seat at the table.”

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