Last Tuesday November 30, Tobi Lutke, the CEO of e-commerce company Shopify, posted on Twitter that merchants on his network hit over $6 billion in sales for this year’s Black Friday & Cyber Monday shopping events, a 23% year over year rise. About 47 million customers worldwide clicked their orders in Shopify websites this month. “These numbers are wild,” he said. Stock in the Canadian company is up over 30% in 2021 as e-commerce continues to grow in the pandemic.
This BFCM is one for the books:— Tobi Lütke (@tobi) November 30, 2021
$6.3B global sales from Shopify merchants
$3.1M/hour at peak on Friday
60K tonnes of carbon emissions offset
These numbers are wild. Well done, rebels. pic.twitter.com/WRQpdOyhoV
So, what to make of the reports saying that Cyber Monday online sales declined for the first time ever? According to marketing software company Adobe, combined online sales from Black Friday & Cyber Monday this year were $19.7 billion, about 1% less year over year. For one, notice that Shopify alone represents nearly a third of sales in the Adobe report. Wild numbers indeed.
We also need to consider that Shopify’s numbers are in fact sales by individual businesses using the company’s software. If many small companies on Shopify have increased their online sales while total online sales were slightly less than last year, perhaps that means that e-commerce giant Amazon didn’t do as well this year.
We will know more once Amazon reports this quarter’s financials. Though it has never been a good idea to bet against Amazon, something different could be happening. After twenty years of total Amazon domination, others are starting to independently figure out e-commerce technology. As Lutke said, “Well done, rebels.”
There is a strong economic incentive for companies of any kind to figure out e-commerce on their own. Amazon made over $24 billion in third-party seller services in the third quarter of 2021, nearly half of its total online store sales. Amazon seller services revenue adds up quickly as the company takes $34 in fees for every $100 sellers earn in sales on the site, according to a report by the Institute of Local Self-Reliance (ILSR):
A striking measure of Amazon’s monopoly power is the vast stream of cash that it extracts from the businesses that have to rely on its site.— Stacy Mitchell (@stacyfmitchell) December 1, 2021
In a new report, we find that Amazon is pocketing a 34% cut of sellers’ revenue — up from 19% in 2014. 1/https://t.co/iO2XEzNAz6 pic.twitter.com/liDbwaWp1d
Compare that to the $29 monthly fixed fee charged to set up a basic e-commerce site on Shopify. Amazon invented e-commerce back in the 90s, including programming things like the first online shopping carts from scratch, and they have remained at the technological cutting edge since then. AWS, the company’s leading cloud computing service, evolved from Amazon’s need to create massive server farms to cope with peak holiday e-commerce sales.
Technology companies like Shopify and others will help you skip programming your own e-commerce website from scratch, but can you get the massive Amazon traffic? Online marketing practices have also evolved. Today, businesses of all sizes are much more knowledgeable about driving their own traffic using email, social networks, and search engine optimization (SEO). Notice how Mailchimp, Facebook, and Google have been constantly in the news amid the rise of e-commerce.
Take Google. The search giant has made some big changes over the last few months to make it easier to buy a product you’re searching for online. Search for a product today and you will get a little gallery of product images, brands, and prices at the top, middle, and side of your page displaying the results. In fact, Google announced a Shopify partnership in 2021 to make it easier for merchants to reach search consumers. It makes sense: if you are selling online, you are more likely to buy online advertising to promote your e-commerce store (Amazon makes billions of dollars in seller online advertising).
SEO practice has also evolved to match Google’s new direction. SEOs break down search user intent in four categories progressively closer to a sale: informational, navigational, commercial, and transactional. Your intention when searching can be deduced by the keywords you type. For example, if you search for a company brand you might be trying to find their website, if you’re searching for a product review you are evaluating your options (“commercial” intent), and if you are searching for product prices or sizes, you’re ready to buy. Shopify and other e-commerce platforms make it easier to present the information on your website for each step in that buyer’s journey.
Social networks like Facebook, Instagram, and TikTok also offer their own e-commerce tools. You can set up your online store directly on Facebook, as many companies do. TikTok offers a simple way to buy things you like on the videos you’re watching, an e-commerce approach pioneered by the Chinese so-called “super apps” like WeChat, which let you buy and sell products, get financing, and check the news from within your social media app.
In any case, e-commerce provides tech giants a clear way to offer a social good, a respite from the much harder social interaction dilemmas they face dealing with politics, ideology, and freedom of speech. No wonder they prefer to work on the freedom of commerce.