Shopify (Nasdaq: SHOP) has been one of the big winners of the past decade, successfully creating a platform that allows anyone the ability to easily sell online. Many of its initial features are free, and the company's focus is on helping its sellers grow their business.
As the number of sellers grows, the company's plan is to monetize users by offering them more features and services. Wall Street has been enthusiastic about its early growth, giving the company a $92 billion valuation. However, doubts remain given that the company has yet to be consistently profitable and generated $1.7 billion in sales in the last 12 months.
Shopify's partnerships with Walmart, Facebook, and Pinterest gives its stores more opportunity for growth, which feeds back into Shopify's growth. It will also drive more customers to these merchants as well and reduce the friction between seeing a product and buying it.
Walmart
Consistent with this mission, Shopify announced a partnership with Walmart (NYSE: WMT) to add 1,200 Shopify stores to Walmart's online marketplace. Walmart has its own online platform, like Amazon (Nasdaq: AMZN), where it hosts third-party sellers while handling fulfillment and logistics. In the last quarter, Walmart's e-commerce sales grew 97% over the same quarter, last year.
With this move, Walmart will add more US-based small and medium-sized businesses, give more offerings to customers, and continue the growth of its e-commerce business. It also lets Walmart keep up with Amazon who already has a partnership with Shopify. While Amazon lets anyone sell on its platform, Walmart has a more rigorous process of screening sellers to prevent fraud, redundancies, and competition with its own products.
In May, Shopify announced a partnership with Facebook (Nasdaq: FB) that would enable Shopify sellers to connect their stores to Facebook and Instagram. This was in concert with Facebook announcing its own efforts to let merchants sell products through Facebook and Instagram. Facebook believes that it will lead to more demand for ads on its platform with these stores. Essentially, Shopify will handle all the backend stuff like order management, inventory, product sourcing, and fulfillment, while Facebook Shops will be the frontend.
Pinterest (Nasdaq: PINS) is much smaller than Walmart or Facebook, but it has 350 million devoted users. Over 80% of Pinterest users have made a purchase after pinning a product they like. Its partnership with Shopify will allow the automatic pinning of any Shopify store's product. Also, any Shopify store's Pinterest page will get a "shop" tab that will allow one-click ordering without having to leave Pinterest. There will also be more integration to allow Shopify stores to easily promote their products on Pinterest.