Shopify Marketplace to Dispense with the Evolving Microsoft e-commerce tools?

Microsoft in known to be the leading developer of personal computer software systems and application. They now consider giving their cloud customers an improvement of e-commerce tools. Shelley Bransten, Microsoft’s VP of retail and consumer goods, was recently interviewed at The Information. She mentioned that it could be a piece of alarming news for Shopify since Microsoft was pondering about it very seriously.

Shopify’s Growth

Shopify, founded in the year 2014, is known as a “one-stop shop” that gives different services together. Like tools for creating e-commerce websites, processing orders and payments, creating marketing campaigns, keeping customer relationships, analyzing data, and more. As a result, its income grew 59% to $1.07 billion last 2018. In addition, this year, they expect to reach 37% sales growth.

Even with this development, GAAP doesn’t acquire Shopify as a profitable business. There is an increasing list of similar services like Adobe’s Magento, Facebook’s Instagram Checkout, and Square’s Weebly–  endangering to hinder in its growth.When Adobe obtained Magneto, Shopify’s stock dropped down. Even with a great competitor, Shopify’s growth didn’t sink the past few years.

Microsoft in Choosing e-commerce Platform

Office 365, Dynamics CRM (customer relationship management) and sales services, and Azure cloud infrastructure platform are Microsoft’s center growth engine which keeps data and powers cloud-based application for their enterprise customers.

Every year, Microsoft’s commercial cloud earnings rise 48% to $9 billion last quarter and deemed 31% of its top line. Within this,  Office 365 Commercial income surge 33%, Dynamics 365 grew 50%, and Azure climbed 76%. Amazon Web Services (AWS) is Azure’s top competitor in cloud platform space. Azure makes a smaller income than AWS. It obtained an increasing list of retail customers like Walmart, Walgreens, and Kroger.

Shopify’s e-commerce services served 820,000 merchants worldwide at the end of 2018. These merchants include smaller companies and an increasing number of large companies like Tesla Motors, AB InBev’s Budweiser, and Penguin Books. While Shopify Plus, another platform for larger businesses, served 5,300 customers.

Hence, If Microsoft will adopt an e-commerce service like Shopify, they can combine it with Azure, Dynamic’s sales, marketing, and CRM tools which will help them to raise their income per client. Microsoft can easily pull this off knowing that Window’s the top PC operating system worldwide.

Investors of Shopify

Bransten stated that Microsoft was only thinking about the idea of improving e-commerce tools for the sake of their retail customer’s increasing demands. They won’t be launching this idea anytime soon. So Shopify investors don’t need to worry about it and instead, use this opportunity of pent-up market demand to boost Shopify’s sales.

Shopify can also be at ease in any news about potential rivals since their stock trades at above 230 times its forward (non-GAAP) earnings estimate. Even with this positive growth, Shopify won’t just sit back and watch its competitors grow.