Shopify's second-quarter performance improved, with focus shifting back to DTC and B2B businesses

It is learned that on August 2, Shopify announced its second quarter results for 2023. Data shows that after cutting logistics business and layoffs, Shopify is slowly recovering growth. As for the next business focus, Shopify revealed that it will focus more on DTC and B2B business.

According to data, in the second quarter ending June 30, Shopify's revenue increased by 31% year-on-year, from US$1.29 billion in the same period last year to nearly US$1.7 billion, and its total merchandise sales GMV also increased by 17% year-on-year.

Although net losses widened to $1.31 billion from $1.2 billion in the same period last year, the revenue figures still indicate that Shopify is turning around after a challenging period.

Shopify laid off 20% of its employees last quarter due to slowing sales and declining revenue. In May this year, Shopify also sold its two acquired logistics startups, Deliverr and 6RiverSystems, to freight service provider Flexport and British grocery delivery company Ocado Group, respectively.

Tobias Lütke, CEO of Shopify, said that logistics infrastructure is just a sideline for Shopify. This year, Shopify's focus is to return to its main mission, which is to attract more merchants to start DTC business and expand business in the B2B field.

In January, Shopify introduced tools such as Commerce Components, which gave brands such as Mattel and Glossier access to core Shopify features such as checkout. Shopify has also made artificial intelligence a greater priority to help sellers ease sales tasks.

However, the DTC market is currently in a precarious state. DTC brands face greater challenges due to factors such as inflation, rising customer acquisition costs, and a shortage of venture capital funds. Therefore, growth may still be limited for Shopify.

Shopify needs to develop a very sophisticated marketing route to acquire new customers, retain existing customers through continuous innovation, and strike a balance between controlling management costs and rising labor costs.

Compared with the DTC market, B2B has a larger market space to develop and a larger scale ceiling. Shopify is also continuously focusing on B2B business. Recently, Shopify also released new tools such as Marketplace Connect and Shopify Collective to help merchants conduct B2B business more easily.

The second quarter financial report shows that since the addition of brands such as Kraft Heinz Company, Brooklinen and Momofuko, Shopify's B2B business is gaining traction, with its B2B GMV increasing by 61% in the first half of 2023. Although it currently accounts for only a small part of Shopify's overall business, it still has huge growth potential.

The second quarter's performance data shows to some extent that Shopify has begun to find its core business model and gradually found a balance between customer acquisition and retention, investment in innovation and reasonable resource allocation. For the third quarter's performance, Shopify expects revenue to increase by 20% year-on-year and profitability to be higher than in the first half of the year.

Editor✎ Ashley/

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