Founder and CEO Tobias Lütke on creating opportunities for Shopify’s ‘one million merchants’
Brooklyn, NY—It’s been a busy quarter for Shopify, the e-commerce giant whose platform helped merchants generate $183B in “global economic activity” between 2016-2018 alone. In June, Shopify launched a proprietary fulfillment network. And in September the Ottawa-based company announced it would acquire 6 River Systems and its “collaborative robotics fleet,” providing a picture of the very present future of warehouse fulfillment.
This week, Shopify Founder and CEO Tobias Lütke spoke at Bloomberg’s annual Sooner Than You Think conference in New York, where founders, investors, media, financiers, engineers, and other executives gather to discuss how various technologies and ideas will shape the future of business as we know it. Here are a few highlights from Lütke’s 20-minute conversation with Bloomberg editor, Tom Giles.
On creating competitive opportunities for new e-commerce businesses
Early retailers, Lütke explained, did well because they “solved for availability.” He mentioned John Wanamaker’s invention of the retail store as a starting point. The internet, he said, has made every product available anywhere and at any time. This has democratized the space(s) where commerce can take place as well as who is able to participate, from consumers to marketers. So as new (often smaller) retailers have entered the marketplace, traditional retailers have struggled.
As a result, “solving for availability” is no longer the sole metric for success, and this has created opportunities for entrepreneurs to succeed in various marketplaces as well as reach consumers in fresh ways. “[These new retailers] have a completely different relationship with their customers,” said Lütke. “They’re creating products that they developed in direct relationship with the people that are using them rather than with the merchandising purchasers who put them on shelves.”
We’re not competing with Amazon, we’re helping other people compete with Amazon.
On helping small businesses overcome the fulfillment obstacle
During the interview, Lütke positions Shopify not as an e-commerce software company but instead as a platform that helps entrepreneurs. He said that the one million merchants who operate on Shopify more often than not come to a crossroads: stay the same size, or scale significantly in order to ramp up fulfillment demands. “We want to eliminate that choice,” said Lütke.
One step to eliminating that choice is by helping Shopify’s one million merchants with fulfillment. The acquisition of 6 River Systems is aimed at helping entrepreneurs “ensure the quality of fulfillment at warehouses so that they operate at [a level of quality] that our customers need.” This includes timely delivery, lower shipping costs, and superb customer service. It also gives small merchants choices beyond Amazon.
On disrupting Amazon perceived e-commerce dominance
Later in the interview Lütke shared his perspective on the questions of “the biggest challenges facing e-commerce upstarts.”Said Lütke: “It’s important to understand the dichotomy of the centralization of markets versus distribution. Amazon wants an empire. It wants to be the only place you buy everything from. What Shopify is doing is we’re arming the rabbits. We’re not competing with Amazon, we’re helping other people compete with Amazon.”