Sunsella Shares Perspective On Shopify Quarterly Loss

Las Vegas, NV based Sunsella recently shared a few comments regarding the reports of Shopify’s unexpected third-quarter loss. While the company is somewhat removed from the immediate fallout this loss represents (as they are a kitchen goods and utensils manufacturer), their team prefers to keep a sharp eye on the movement and proliferation of online marketplaces since the company primarily offers their goods through similar internet storefronts.

The company points out that Shopify, Inc., based in Canada, is not itself an online storefront. Instead, it is a subscription service that allows companies who sign up to access their software service and create their own storefronts. Through this service, the company’s subscribers can create a personalized website that utilizes Shopify’s shopping cart solution to sell, ship, and manage any products they offer. In effect, the company offers a convenient and readily available template upon which an online business can be quickly launched without the months or years of website development that such as step may otherwise require.

Sunsella representative Mike Law commented that, “Shopify’s main strength lies in the fact that it allows businesses to outsource the administrative setup they may not be able to take on by themselves. Their platform allows users to sell in a variety of places, including over the web, mobile, social media, online marketplaces, brick-and-mortar locations, and so on, so it boasts a great degree of versatility.”

He continues, “A business very much like our own could launch relatively quickly without getting bogged down in having to build systems to manage products, inventory, payments, and shipping from scratch. Since such a platform wields the enormous potential to foster heavy competition between businesses who no longer have to fight that uphill battle, we find it extremely troubling to hear that they are facing difficulties. We sell through our own website as well as Amazon at the moment, but we are always eager to find new avenues to pursue.”

Shopify experienced a fall in stock price immediately following their reported adjusted loss of 29 cents a share for the third quarter, a surprise for investors since it as expected that the company would announce a surge in net income that would amount to 11 cents a share. However, Law notes that investors may have failed to consider the true reasons behind the reported loss before they pulled out.

He says, “A massive part of the company’s $72.8 million loss was incurred for a tax charge of $48.3 million. Taxes are the price of doing good business, and investors should be careful not to let themselves be swayed before learning everything they can. On top of that, Shopify clearly understands that they need to be aggressive in order to take on their biggest rivals Amazon and eBay, which explains another chunk of their losses—they have been investing heavily in their own expansion.

Law refers to an announcement that the company made earlier this year that they would be spending $1 billion to build fulfillment centers across the US. In addition to this, they recently bought a warehouse technology provider, added support for more languages on their website, and have even taken steps to bolster their delivery network. Most notably however, the loss they reported was accompanied by a boost in revenue. Shopify enjoyed a 45% surge in revenue to $390.6 million, narrowly surpassing some market expectations. Similarly, their two biggest streams of income (merchant and subscription revenue) fared better than analysts’ estimates for the third quarter.

A quick visit to Shopify’s homepage will show that the company proudly boasts they are, “Now home to 1,000,000 business owners.” Shopify CEO Tobi Lutke touted this as a sign of progress and strong growth, alluding to the faith the company’s subscribers have in the platform. In a press statement, he said that "More than a million merchants are now building their businesses on Shopify, as more entrepreneurs around the world reach for independence.” He continued, "These merchants chose Shopify because we're making entrepreneurship easier, and we will continue to level the playing field to help merchants everywhere succeed."

Learn more about Sunsella, their place in the ecommerce world, and the industry leading products they offer by contacting Mike Law. More information can also be found on their website. The company and their leadership team look forward to Shopify’s reports at the end of the next quarter.