Anyone who’s been a shareholder of Shopify’s (NYSE:SHOP) for more than a year has got to be amazed at how far Shopify stock has come in recent months. Up 44% in the past 90 days and 17% year to date through January 24, there doesn’t seem to be anything capable of stopping this momentum play in its tracks, not even Amazon (NASDAQ:AMZN).
However, after reading a mostly complimentary article about Shopify in Vox, I’m not so convinced the eCommerce platform is entirely out of the woods just yet. That’s because the devil you know (Amazon) is much better than the devil you don’t (new entrants).
Vox contributor Patrick Sisson’s article specifically mentions Elliot, a new shopping marketplace that has over 1,300 merchants in more than 86 countries using its platform.
“Marco Marandiz, one of the three co-founders, boasts the merchants can go live more quickly than they can on Shopify, again using a no-code approach, and the only cost is a 1 percent fee for every sale,” Sisson wrote.
Currently, Shopify has 769 times the merchants Elliot has, so I don’t think Shopify CEO Toby Lutke is shaking in his boots thinking about the nascent competition. However, business history has proven that the first to market isn’t necessarily the ultimate winner.
If Eliot can replicate what Shopify does for a fraction of the cost, who’s to say, merchants, especially smallish ones, won’t move over to Elliot or some other upstart?
Elliot and the Other Upstarts
As someone who writes about money all day, I’ve often felt like it would be healthy for me to find a sideline business that doesn’t involve writing or investment analysis but instead pulls from the more creative side of my brain. Something that I can easily set up and slowly grow over time. Something that doesn’t require 24/7 attention or a tremendous amount of seed capital.
What that is, I haven’t the foggiest, but someone like Elliot might be the way to go.
In Sisson’s Vox article, he mentions Brittany Chavez, who runs ShopLatinX, a curated Instagram feed. Chavez found Shopify too complicated when she was looking for a platform last fall to operate her business. Elliot’s simplicity won the day.
As Elliot co-founder Marco Marandiz says, “We allow people to set up and do it in a day. We’re moving with the trends of people building audiences and coming upon celebrity overnight.”
Elliot CEO Sergio Villasenor believes the adoption of 5G and smartphone technology will change the way retailers approach their digital footprint. He points to WeChat as an example of where the world is headed.
“WeChat is an example of how technology can become an operating system for life by properly blending convenience, content and commerce; that is what we are building at Elliot, and strive to provide our customers and consumers with our infrastructure and technology,” Villasenor stated in May 2019, shortly after making its platform accessible to the public.
Elliot is investing in seamless technology that can deliver the three C’s of convenience, content and commerce. As a shareholder of Shopify, you ought to at least be aware that new options are being made available that can keep up with the e-commerce platform.
The Bottom Line on Shopify Stock
In November, I said Shopify was worth holding for the long term. In mid-December, I said it could hit $500 by April 1. As I write this, it’s $35 away from doing so.
There is no question I am positive about Shopify’s future. It’s a Canadian tech success. Living in Canada, it’s nice to see.
However, I think it’s fair to point out from time to time the things that could trip up Shopify’s growth.
While you might think Amazon is its biggest threat, I believe that investors ought to be equally concerned about upstarts like Elliot. That’s because if a guy like me can have an online store up in a single day, I’m sure they’re a lot of others who’re seriously considering this viable alternative.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
