From a previous post I mentioned that one of the reasons that Shopify has continued to climb is because of potential governmental concerns with Amazon. The linked article talks about how Amazon is working to control all aspects of internet retail and the difference with how Shopify is working.
Personally, I think that what Amazon is doing is very monopolistic and concerning. Whether you believe that or not, it does seem that if the government ever decided Amazon is too powerful, that Shopify would benefit. It certainly is one of the reasons I own both companies. Retail is changing and these two companies are at the heart of it all and I want to be in a position to benefit…
very interesting article that explains the differences…
https://stratechery.com/2019/shopify-and-the-power-of-platfo…
Randy
Long both SHOP and AMZN
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I like to read Stratechery. He is putting out good arguments. I was wondering what you thought of his piece on business models using open source. My recollection was that he didn’t favor them and he did put MongoDB and Elastic in this same bucket. In the short term, MDB and ESTC (after a while of churn, this stock seems to be heading back up) seem to be ok but what do you think of them in the longer term? What is it that they do that could sustain them?
tj
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Hi tj,
I haven’t read other articles from there but will check it out. No sure i have a knowledgeable opinion about open source in general.
I am reading a book titled “The Myth of Capitalism” a fascinating book abut how the business world is getting more and more monopolistic and how it favors the businesses but not necessarily the consumer.
It does seem that many of the SAAS companies are heading down this path even if they are still small. Probably very good for the companies and an interesting read for those who own these companies, myself included…
Randy
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I am not sure if they are all heading down (or up) this path.
Certainly some will win in the long term and some will fade away. I think typically the winner starts with a small part and is able to move into adjacent territories while some others are not able and get squeezed out.
the same thing will apply to the SaaS sector.
tj
Buried deep in that article is the counterpoint to Saul’s argument about seeing ads for Shopify on the subway, about starting a business for your home-baked goods or whatever:
“To that end, I would argue that for Shopify a high churn rate is just as much a positive signal as it is a negative one: the easier it is to start an e-commerce business on the platform, the more failures there will be. And, at the same time, the greater likelihood there will be of capturing and supporting successes.”
Shopify isn’t about setting up “corporate websites”, it’s about capturing as much DTC revenue as possible.
And yes, one of the best methods to do that is bagging big brands with big GMV like Kardashians and Tesla, but it’s also about getting the Kardashians and the Teslas of tomorrow onto the platform today.
Chris
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