A Threat To Shopify That All Bulls Must Consider

Jan. 25, 2023 6:29 AM ETShopify Inc. (SHOP), SHOP:CAAMZN95 Comments
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  • 74% of surveyed Shopify merchants are considering using ‘Buy with Prime’, posing a threat to Shopify’s merchant solutions revenue, which comprised 72.5% of total revenue in the last quarter.
  • Amazon is trying to win merchants’ trust by displaying how initial members are indeed benefitting from the program, with conversion rates improving by 25% on average.
  • ‘Buy with Prime’ is a costly service, with merchants giving up over one-fifth of their sales revenue per order, while Shopify strives to offer more cost-effective fulfilment solutions.
  • There are certain factors that impede Amazon’s ability to engage in price wars through ‘Buy with Prime’, which work in Shopify’s favor.
  • Interestingly, Amazon refuses to offer statistical insights into site-traffic improvements through ‘Buy with Prime’ advertising solutions, suggesting that Amazon does not have meaningful traffic improvement statistics to proclaim.

Shopify Plummets Most Since 2020 On Slowing Growth Outlook

Bloomberg/Bloomberg via Getty Images

Shopify (NYSE:SHOP) started off as offering subscription services to digital merchants, enabling them to set up and run their own e-commerce websites. Overtime, Shopify has been rolling out numerous other services, known as 'merchant solutions', to constantly meet merchants' evolving business needs, and

Buy with Prime FAQs


'Buy with Prime' Fees Breakdown

Amazon / Buy with Prime

'Buy with Prime' Total fees as a % of product price

Calculated using company figures

Shopify fulfilment fees


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Striving to uncover long-term investment opportunities (10+ years) through in-depth research and analysis. Nexus Research seeks to evaluate and compare business strategies to determine a company’s potential for market penetration, revenue growth and profit margin expansion. During market downturns, stocks often become cheap very fast, creating various investment opportunities at once. Amid such circumstances, investors often lack the time to research a company thoroughly before making investment decisions, out of fear that they will miss out on attractive entry points. Therefore, Nexus Research not only uncovers present-day buying opportunities, but also offers extensive insights on solid companies with promising growth potential despite expensive valuations, thereby allowing investors to be ready and make well-informed investment decisions when the stock becomes more reasonably valued.

Disclosure: I/we have a beneficial long position in the shares of SHOP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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