Enterprise Adoption of Shopify Underscores Switching Costs

Shopify strives to be a one-stop shop for small retail businesses, especially those that are e-commerce primarily, only, or first, and has made great strides in addressing the needs of enterprise customers as well. The company offers a simple but robust e-commerce platform with a variety of related add-on functionalities that ultimately converge into a turnkey solution for small and midsize businesses, or SMBs. Shopify’s rapid rise since its 2015 initial public offering underscores a nascent software niche that is rapidly increasing and demonstrates a winning solution. We believe the company has established a narrow moat, as switching critical e-commerce platforms has financial and operational costs for an already resource-constrained SMB. We forecast robust top-line growth benefiting from e-commerce trends over the next several years.