Shopify and Walmart team up to take on Amazon
Shopify Inc. is upping the ante in its battle against Amazon.com Inc. by aligning itself Walmart Inc. in its fight with the Seattle online retailer.
The Ottawa-based e-commerce giant, whose software powers online stores for more than one million companies, on Monday announced the partnership, which will allow U.S. merchants to sell their products on Walmart's website.
By the end of the year, Shopify expects 1,200 of its merchants to be selling products through Walmart's marketplace, which is visited by more than 120 million Americans every month.
Amazon had more than 2.01 billion visits in February alone and is the most visited e-commerce property in the United States, according to Statista. Walmart holds the number two spot.
The partnership is their latest swing at Amazon, a behemoth that has revolutionized the world of e-commerce with its online marketplace, massive warehouses and speedy delivery services.
Amazon has been eating into Walmart's low-cost model by enticing customers with equally affordable prices and the added convenience of quick delivery.
Asked whether the Walmart deal was signed with Amazon in mind, Shopify's vice-president of product didn't single out any one company. “Anything that reduces the barrier to entrepreneurship is good for merchants, good for consumers, and good for Shopify,'' said Satish Kanwar.
His company, however, tweeted a graphic on Monday based on an image used with a recent story in the Guardian newspaper about the Shopify-Amazon rivalry. Shopify animated the graphic to zoom in on a frowning character apparently made of Amazon boxes that was being towered over a shopping bag bearing Shopify's logo.
Walmart has been trying to keep up with Amazon, which has undercut retailers with its algorithms and in-house brands and hastened the speed of online shopping, sending competitors scrambling to keep up.
“If you have a common enemy then the idea of forming an alliance to try to counteract your common enemy makes a lot of sense,'' said David Soberman, a University of Toronto marketing professor.
“Shopify doesn't benefit from the growth of Amazon. The stronger that Amazon is, the less likely it is that an independent merchant wants to set up an online store with Shopify.''
The Walmart-Shopify partnership could work well, Soberman said, because it matches Walmart - still the world's biggest retailer - with one of Shopify's strengths: inventory management.
Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, said the two are also a good fit for each other because Walmart is keen on digital growth - an area where Shopify has long focused.
Walmart.com's sales surged 74% in the first quarter of its fiscal year as the brand experienced increases in demand for curbside sales and online orders during the pandemic's early days, when details of the Shopify partnership were being worked out.
But even together, Walmart and Shopify are unlikely to beat Amazon, Hutcheson said.
“Amazon is always one step ahead of everyone in terms of where they are going to pivot next,'' said Hutcheson.
“I think (Shopify) will be able to give it a run, but not catch up.''
Shopify, which temporarily topped RBC as Canada's most valuable publicly traded company earlier this year and counts among its customers Kylie Cosmetics, Budweiser and Nestle, has been in more direct contention with Amazon since last year, when the company announced plans for a network of fulfilment centres meant to help merchants lower shipping costs and ensure timely deliveries.
The centres will focus first on the U.S., one of Amazon's strongest markets, with the door open to expansion in other regions.
The Walmart partnership comes a month after Shopify teamed up with Facebook Inc. to allow merchants to create a customized online storefront for Facebook and Instagram.