How Shopify Became Canada’s Most Valuable Company

When Shopify CEO Tobias Lutke co-founded the company in 2004, it is unlikely that he imagined the company would become the highest-valued Canadian-listed stock, with a market capitalization of more than $150 billion, and that he personally would become a multi-billionaire several times over.

Shopify’s Roots

Lutke was a computer programmer by trade and wanted a new direction in his career. He was attracted to the online retail space and felt that niche products, such as snowboards, could command hefty profit margins. 

Once Lutke’s snowboarding e-commerce site was launched, he was not happy with the visual storefront. For example, Yahoo Stores would not even allow Lutke or any other store to change the background color.

So Lutke simply created a new e-commerce platform from scratch that would let him design the type of website he wanted, based on his specifications.

By 2006 he was selling this e-commerce software to small and medium-sized businesses. Lutke’s platform made it exponentially easier for entrepreneurs to set up an online business during what was still the very early stages of the Internet and e-commerce.

Momentum really picked up in the early 2010s when Shopify created a mobile app that lets store owners view their e-commerce platform from an iOS mobile device. By the end of 2010, Shopify became a major player in the Canadian start-up scene after raising $7 million from outside investors.

Evolving and Adapting

Shopify continued to develop its business model and dedicated itself to helping small businesses succeed in the digital universe. One of the biggest problems that entrepreneurs faced was the high cost associated with accepting credit card payments.

Problem solved.

In 2013 Shopify launched Shopify Payments, which made it easier and cheaper for entrepreneurs to accept credit cards. Other initiatives designed to make life a bit easier for clients included the 2016 launch of Frenzy, a mobile app that helps with flash sales.

One year later, the company struck a partnership with e-commerce giant Amazon that would let Shopify’s merchants sell automatically on Amazon via their Shopify stores. The same year, Shopify acquired Oberlo, a platform that connects Shopify merchants with suppliers that ship products directly to consumers.

Other notable developments include a 2019 deal with Snapchat that allows Shopify’s merchants to buy and manage ads on the social media platform from their Shopify account.

Shopify Versus Amazon

By 2019 Shopify had built an impressive business, but it was always compared with e-commerce retailer Amazon. The problem with this comparison, whether fair or not, was that Shopify could not match Amazon’s logistics brilliance, which was the result of billions of dollars of investments over many years.

Amazon had figured out how to efficiently ship tens of millions of products to hundreds of millions of people in two days or less. Shopify could not compete with that, but the company rose to the challenge and announced in 2019 a $1 billion investment to create its own network of fulfillment centers in the U.S.

Once complete, Shopify would be able to offer two-day delivery options across nearly the entire United States. Other similar initiatives were planned for international markets.

Shopify took its initiative a step further and explained how it could offer a better selling proposition than Amazon. According to the Financial Post, Shopify Chief Product Officer Craig Miller said during a presentation: “Let’s admit it: You want the package arriving in a box that has your logo on it, not theirs.”

Conclusion: Shopify Made Investors Rich

Early investors who bought shares in Shopify during its 2015 initial public offering reaped a mind-boggling return of more than 4,000%. This means that every $10,000 invested in 2015 would have been worth almost half a million dollars in 2020.

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