The e-commerce rebels are making their advance.
Last October, Shopify CEO Tobi Lutke said his company’s goal was to “arm the rebels” against the Amazon.com empire. Since then, the mantra has become a rallying cry for Shopify’s employees and the merchant customers that use its e-commerce store software. And now, the business turmoil sparked by the COVID-19 pandemic is creating an opportunity for the online seller rivals to gain some valuable ground over their giant competitor.
Amazon is widely considered one of the biggest beneficiaries of the e-commerce boom, as self-isolating consumers shift their shopping behavior to purchase more online. The numbers are bearing out the trend: While most companies are suffering from dramatic business slowdowns, Amazon recently posted first-quarter revenue of $75.5 billion, up 26% from a year earlier, and projected continued momentum by giving a sales growth forecast range of 18% to 28% for the June quarter.
Amazon’s growth hasn’t come without issues, though. The company has faced severe logistical challenges to meet demand — including the rapid hiring of 175,000 additional workers. And the stress put on its supply chain and delivery networks, along with the prioritization of certain essential items, has led to shipping delays and many shortages for its customers. Questions revolving around workplace safety have also dogged Amazon.
With Amazon so much in the spotlight, it may be surprising to know that consumers are increasingly going elsewhere for their online shopping needs. In fact, several e-commerce sellers are showing dramatically faster growth rates than the tech giant. On Wednesday, Shopify revealed the aggregated online sales of its merchant customer base grew 46% in the first quarter and accelerated further in April. That news came after online furniture retailer Wayfair said it had revenue growth of roughly 90% so far in its second quarter, a significant increase versus the 20% growth it generated for the three months ended in March.
Traditional retailers who sell online are flourishing as well. On April 23, Target said its online business had risen more than 275% month-to-date to that point, while electronics retailer Best Buy also pointed last month to recent triple-digit growth trends for its website. Costco Wholesale, meanwhile, reported April e-commerce sales growth of 86%.
For all the antitrust scrutiny Amazon has gotten for crushing the competition in e-commerce with its leading 37% share in the U.S. last year, according to eMarketer, these recent numbers point to share losses for the tech giant. Rivals now have an opening to show they, too, can delight customers with good service and build consumer loyalty. And if they can take advantage, perhaps the e-commerce race isn’t over yet.
What is the clearest signal that investors, at least, are noticing the progress? On Wednesday, Shopify briefly surpassed Royal Bank of Canada as the most valuable company in Canada for the first time. Yes, the rebels may have a fighting chance.
Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron’s, following an earlier career as an equity analyst.