Shopify (TSX: SHOP) has changed the game!
Shopify (TSX: SHOP) (NYSE: SHOP), Canada’s Most Valuable Company, made major announcements at an event yesterday that could boost the stock’s performance. Changes and upgrades to the developer ecosystem could be the perfect catalyst for the next stage of business growth.
Here’s what SHOP equity investors need to know.
0% revenue share
One of the biggest announcements at this year’s Shopify Unite developer conference was that Shopify is changing its revenue sharing strategy. Starting August 1, Shopify developers can pay 0% of revenue up to the first million dollars in annual revenue. This annual limit is reset every year. Beyond the initial limit, developers must pay a 15% fee on revenue, up from 20% previously.
Eliminating fees is a smart strategy to attract more developers to the Shopify ecosystem. It removes the barrier to entry for small development companies and strengthens Shopify’s position as the best platform for ecommerce services.
The move also puts Shopify in line with other tech giants who have recently cut fees for small businesses and independent developers. Experts say these measures could mitigate the risk of developer complaints, lawsuits and antitrust investigations around the world.
Online Store 2.0
Traffic to Shopify stores has increased over the past year. Today, to improve the customer experience, the team is reviewing the appearance and functioning of online stores. The redesign, known as Online Store 2.0, boosts performance, streamlines content, and adds better user interfaces to stores in the Shopify ecosystem.
It also reintroduces the Shopify Theme Store, a marketplace for developers to create and sell prebuilt themes to over 1.7 million merchants. Again, developers don’t have to pay a fee on theme sales of up to $ 1 million each year, but Shopify gets a 15% share of the revenue beyond that. This should increase the turnover of the company.
Shopify Checkout, the company’s online payment solution, also received upgrades and tighter integrations with the main platform yesterday. Developers can now fully integrate Shopify Checkout throughout the entire customer journey, which should improve sales for merchants and, in turn, Shopify itself.
This payment solution reduces friction and eliminates payment processing fees that Shopify would have had to pay to a third-party provider like Stripe or Pay Pal.
At the end of the line
Shopify increasingly looks like the tech giant it deserves to be. Vertical integration with your payment solution is a great way to reduce friction. The launch of the 2.0 online store should be exciting for merchants and developers.
However, the elimination of fees for small developers is the most notable move here. Thousands of developers around the world are actively improving the platform with creative tools and software solutions. These range from simple themes to complex data management systems for Shopify’s 1.7 million merchants.
Allowing small independent developers to keep 100% of their revenue is a great way to attract more innovation to the platform. This should expand Shopify’s pool of software solutions, making it easier to be a merchant on the platform. In the long term, investors should expect this development to indirectly affect the company’s bottom line.
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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
The Motley Fool owns stock and recommends PayPal Holdings and Shopify. The Motley Fool recommends the following options: $ 75 long calls in January 2022 on PayPal Holdings, $ 1,140 long calls in January 2023 on Shopify, and $ 1,160 short calls in January 2023 on Shopify. Foolish contributor Vishesh Raisinghani has no position on the stocks mentioned.