Cart before the horse
During the pandemic, e-commerce boomed. Many people expected that trend to continue — the “new normal” was, after all, here to stay — but, e-commerce sales have actually plateaued since then, with online giant Shopify ringing alarm bells this week about the state of the industry.
By the last quarter of 2020, nearly 17% of US retail sales were done online. Most expected that figure to continue rising… cut to Q4 2023, though, and what was e-commerce’s share? Still 17%.
Despite Shopify president Harley Finkelstein telling investors that they’re currently seeing “the strongest version” of the company ever, SHOP shares still slipped 19% on Wednesday (the stock’s largest single-day decline in history), after forecasting slower sales growth and narrower margins. Meanwhile, revenues at the e-commerce platform, which provides most of the infrastructure for businesses to set up online storefronts (the company offloaded its logistics arm last year), were up 23% from the same quarter last year.
Great expectations
Shopify’s earnings reports list its location as “Internet, Everywhere” — the company is actually headquartered in Canada, no matter what its press releases say — suggesting a sense of omnipresence that investors were banking on when the company’s revenues started to soar during the pandemic.
The company did grow at a rapid clip since then, but expectations seem to have outpaced reality, as retail sales returned to the physical world and Shopify’s growth slowed. SHOP shares are now down 63% from their Nov 2021 peak… but are still up more than 140% in the last 5 years.
