Shopify Shifts Focus to Larger Clients for Sustainable Growth
Sign up for ARPU: Stay ahead of the curve on tech news.
Shopify, known for its success in empowering small businesses, is pivoting toward larger enterprise clients to foster more stable and long-term revenue streams, reports the Wall Street Journal. While some analysts view this as a departure from Shopify's origins, the company frames it as a natural scaling of its platform to accommodate businesses of all sizes.
"We’ve built a flexible, scalable platform that powers merchants of all sizes," said Shopify President Harley Finkelstein.
This shift, however, comes with increased costs associated with dedicated sales teams and complex onboarding processes for larger clients. The sales cycle for enterprise clients can extend from six to twelve months, with implementation taking a similar timeframe, according to Shopify CEO Jeff Hoffmeister. Analysts attribute this to the complexities involved in replacing legacy systems and navigating internal decision-making structures within large organizations.
"It is a traditional enterprise, direct-sales force, knock-on-door, slow relationship-building type of a sale," explained Ken Wong, an analyst at Oppenheimer.
Despite the higher costs, analysts believe this strategy will be crucial for maintaining Shopify's high-growth trajectory. "That’s the necessary evil to get to better growth in 2025 and 2026," Wong stated. This aggressive expansion is evidenced by Shopify's claim of poaching "hundreds" of Salesforce customers, including notable brands like Toys R Us and Casper, citing lower prices and a more flexible pricing model as key advantages.
Shopify's recent wins include notable brands such as Reebok, Overstock, Barnes & Noble, Off-White, BeautyCounter, and Lionsgate Entertainment. This growing list of enterprise clients showcases Shopify's increasing competitiveness in the market.
The company anticipates strong revenue growth in the fourth quarter, projecting a mid-to-high twenties percentage increase driven by merchant confidence for the upcoming holiday season.
"The company has built strong momentum behind Shopify’s enterprise initiative, as seen through 16 enterprise merchant launches in the third quarter alone," said Keith Weiss, an analyst at Morgan Stanley, to the WSJ.
Shopify has also taken steps to streamline the onboarding process, enabling merchants to migrate data to its platform within minutes, instead of days, highlighting its commitment to improving efficiency.
The company's success in securing enterprise clients indicates its growing competitiveness against established players such as Oracle, Adobe, and SAP.
"Number one for me is that Shopify is in every negotiation room," said Rick Watson of RMW Commerce Consulting. "That’s something they were not doing a year and a half ago.”