Orange

So many gems in this thread but this one takes the cake. Just a "taxi service with an app" You realize uber has like 2 or 3 thousand software devs working for them? Wicked smart silicon valley developers, many of which are working on developing self driving cars. "Just a taxi with an app" You realize they have 75 million paying users, and 3 million drivers. But their business model isn't about network effects? What the hell is wrong with you guys, lol. How about this, go hire some developers, make an app, get everyone in the world to know about it, have your brand name become better known than the service itself ("Uber" is a better known word with consumers than "rideshare"), then bring 75 million paying customers together with 3 million people providing them a service. How easy would that be to replicate?

It's a hell of a lot easier to reproduce licenses trucks and warehouses. It's really just a matter of deploying capital. Having a food delivery brand that's a household name... with millions of customers, thousands of restaurants, and a legion of contractor delivery people all coming together... you can't just throw money at that and make it happen. It is f*cking hard. That's what a real moat looks like my friend. I think you might want to step away from the chemicals and get some fresh air.

Exactly. It's also a matter of size. For a company as large as Amazon, with their revenue and access to capital, it's not that big of a deal to buy some bankrupt retail assets when the opportunity presents itself.

Thank you for sharing this. The pizza arbitrage anecdote is funny, and I certainly wouldn't invest in a company like Doordash, but I'll play devil's advocate because this piece is very opinionated and short-sited. These companies are trying to build a platform with enormously powerful network effects, to become a household name and a major player in a massive global industry like food delivery. Think about the rewards of that if they succeed... To have a seriously durable competitive advantage in such a large market - a business model that is essentially a toll road for restaurant food delivery... think about how incredibly valuable that could be once the market has matured and cost of customer acquisition falls. It might actually be worth blowing through half a billion a year for a while, while the opportunity exists to corner part of this market. Investing is about laying out money today, not in hopes of making money today, but making money in the future. I think the VC's understand the long term risk reward at play here better than these writers, who are too preoccupied with spinning up articles and tweets that stir up readers, but offer little in the way of insight. That's my 2 cents

"solved the customer acquisition problem" & "has optionality in spades" you guys are something else.

Not a valid thesis. Github is just a tool. AWS is just a tool. Adobe is just a tool. And Shopify belongs in that category of exceptional tools. I'm not saying the current valuation is justified -- but that is true for most growth stocks today. Github is a community, not just a tool, they also only do $300 million in revenue. AWS is a tool, but they own major data centers, it's not a code base. Radically different customer base as well. Adobe is perhaps the most similar, but they are b2c as well as b2b, their software is used by technicians not by people looking to save hassle and time. Plus their brands are so strong, they have become common words in the English language (eg Photoshop). And despite all this, being an industry standard for 20 years, they still only do $13 billion a year. Yet Shopify is going to do $100 billion someday. Yea ok. These comparisons suck my man, it's lazy thinking on your end. And honestly, when you dismiss my long and thought out reply with nothing more than a couple sentences and a bad analogy, it's just a waste of time. Makes you seem like a lazy a-hole who only wants others to confirm his opinions. I won't be revisiting this thread.

I sell merchant fulfilled and have a business partner that handles logistics, for a cut. My products are small and there are few returns. 1. I decided on Amazon because they have the best customer base. Amazon customers are ready to buy, they convert like crazy. It’s a huge lucrative traffic source. They are the biggest search engine for products. But I do have plans to go brick-or-mortar someday. Coronavirus has put those plans on hold 2. Merchant fulfill greatly simplifies inventory for me. I sell a large number of SKU's with intermittent demand. Amazon's long term storage fees make inventory management too difficult for my particular business model. 3. There is really no great reason to start a business from scratch with your own code base unless you are a developer yourself. Existing sellers may want customized solutions though, and more flexibility. Magento offers more flexibility for example. 4. I plan to go brick and mortar. I have no plans of starting my own ecommerce site because it takes so much work to optimize both the site and the traffic source. If I were to run traffic outside of Amazon, there is great benefit in driving the customers to your Amazon listings, because this will cause you to rise in the search rankings on Amazon, which helps you get even more sales on Amazon, creating a flywheel effect. 5. SEO (search engine optimization) and PPC (Pay Per Click) Advertising. 6. Once you start to really scale, there are a lot of really minor tweaks and AB testing that you can do that might really help your bottom line. Ecommerce margins are tight. Decreasing a cost by even just 0.5% could actually have a serious impact on your bottom line. Also, Shopify transaction fee isn’t the cheapest. If you are doing $10 million a year in sales, these things start to really matter. Search “Shopify vs Custom Ecommerce Reddit” on google to read what people in the ecomm game are saying 7. I don’t quite understand the question. I’m also not qualified to predict where global ecommerce transactions will be in 10 years, that is a very difficult thing to predict. 8. You do not need Shopify to get customers, or even start your store. If Shopify raised their prices, or tried to flex their power in any way, new and existing ecomm sellers could simply use a different tool. There is a whole community of people who build software tools, who would gladly provide a Shopify type service to compete with them if their prices became unreasonable. I maintain that SHOP does not have much pricing power. 9. I wouldn’t. I personally don’t want to own stock in a b2b software company that doesn’t have serious competitive advantages.

You are correct Amazon has a lot of power (certainly not all the power) and is aggressive in their Amazon Basics knockoff business. Aggressive to the point of being shady. High volume products that are trying to be the low cost provider, who have no special advantage in sourcing/manufacturing, are doomed on Amazon. But what you are really talking about is true with all retailers who have loyal customer bases. Buffett talks about this at length in interviews. Costco’s generic Kirkland brand: Started in 1992. It does $39 billion a year. Versus Kraft, a collection of old iconic CPC brands with decades of marketing and share of mind, does $20 some odd billion. Retailers have unbelievable power. Here’s what you don’t understand. Shopify’s value proposition is that they are an all in one tool for your ecommerce shop. Removing the hassle and barrier to starting a store. Their value prop is not about escaping the power trap of the major corporations that control the customers. Because whoever your traffic source is, that’s who has the power to destroy you. Shopify won’t save you from that. I know guys running Shopify stores that have been destroyed by rising Adwords cost, rising FB ad costs. FB likes to ban accounts in many health categories such as supplements for no reason. Someone will always have power over you in ecommerce when it comes to finding new customers. Shopify’s value prop is easy to replicate, removing the hassle and barrier to starting a store is just a matter of building a code base. To be fair they do a great job at marketing their tool. Also, Shopify isn’t the only place you can build a brand haha. You can most definitely build a brand on Amazon, and own the customer. That’s why people do “package inserts” and offer a “lead magnet” for people to get on an email list. How exactly do you think ecommerce brands “own their own customers” ? The way you own the customer is to either have some direct way of communicating with them, or having share of mind. Both of those things can be accomplished on any platform where people aggregate. Social media, search engines, email lists, ecommerce platforms. Offline or Online, etc… Of course Shopify as a business has merit. It's a nice business. The question of merit for the stock rests on valuation too though. Are they a good enough business to warrant a high valuation? Are they going to grow to $100 billion in revenue someday? (I’m laughing as I write that)

If you look at Shopify as a company that sells a tool, then your analysis makes sense. However, it's like saying Apple sells phones, and Netflix rents videos. You are completely dismissing the possibility that Shopify will become an integral tool for all omnichannel providers and possibly the only tool. Shopify's R&D budgets are essentially the size of its next largest competitor's revenues. Even, Amazon has closed their "webstore" services and recommended people to use Shopify. I'm not sure what e-commerce business you ran - but am I safe to assume you started with a dropshipping website and turned into an FBA store (I guess because you were mentioning the importance retail customers on these platforms)? If you're basing your investment thesis on this, then it's heavily flawed. Businesses, especially small businesses will need to have e-commerce in the future, and when they choose which platform to use - I'll argue Shopify is the only option out there for them. In order to gain customer attention, they will use other advertisers to run traffic to their store. At the end of the day, I may not be right that this could be a $100B revenue-generating company in ten years. However, I'm sure it's wrong to base your investment opinion because Shopify is just a "tool". Unless you believe 100% of e-commerce transactions will only go through Amazon, then I wouldn't agree with you. Ouch! History is hasn't been kind to Canadian companies that shot to the top of market cap list and weren't a bank. I know! :P I've been burned before by investing in Valeant - so maybe you should render all my opinions as a zero for that fact alone haha. It's a great company, no doubt. But 10 years is a long time to wait to justify today's valuation. What's your discount rate? Not exact as I did a simple one in my head but I used a discount rate of 10%. Ending Remarks: Please note that I just offered my opinion, not making a recommendation or no way shape or form saying this is a value investment. This stock can well be expensive if they don't hit their targets. Once they don't hit their targets, then this will most likely go down so fast. No I didn't run a dropshipping business and I'm not doing Amazon FBA lmao. If you seriously think Shopify will ever be the ONLY tool for eComm sellers, you are extremely ignorant of the industry. You come off as pretty ignorant and very emotional. It's a bad combo for an investor, to be sure. To repeat myself, the value lies in having a place where customers hang out. That's why Google Amazon and FB are valuable, they are where the customers hang out. That's extremely hard to replicate. Nobody hangs out on Shopify.com. All they really have that's valuable is a code base. Anybody can hire developers and create their own custom ecommerce solutions. Nobody can hire a developer to create a flow of customers. That's why they don't have pricing power.

+1 This shows how little you guys understand about ecommerce. How are you going to run an ecommerce business without relying on a platform like Google or Amazon? You have to have a way of getting customers. That doesn't negate the fact that it's still a business

I don't comment in this forum normally, but as someone who has ran an ecommerce business full time for the last 3 years, reading this thread full of investors who clearly don't have a deep understanding of the ecommerce game, is particularly illuminating. It gives me a better perspective of how Mr. Market can get things wrong for long periods of time. Shopify is going to make $100B in revenue in ten years apparently. According to a "valueinvestor." Just... wow. The most important thing is really- Shopify sells a tool. It's a nice tool, they do a good job of marketing that tool, it's a well known quality tool. But it's just a tool. The engine to any ecommerce business is web traffic, or customers. Cost of customer acquisition makes or breaks you. Shopify provides no way to gain attention, they have no retail customers. Speaking on behalf of ecommerce store owners, we are slaves to the platforms where the customers hangout. Slave to Facebook, slave to Instagram, slave to Pinterest, slave to Google, super-slave to Amazon. I sell on Amazon, if I wanted to switch to another platform, I would have to entirely rebuild my marketing strategy and core business model. THAT is what high switching costs look like. THOSE businesses are truly valuable, and deserve rich valuations. Shopify does not have truly high switching costs for us ecommerce sellers. They really do not have as much pricing power as investors think, and a large % of their customer base is relying on supply chains that have been permanently disrupted due to Covid. This is a dangerous time to invest in this company IMO, unless the purpose is pure speculation over the short term.

Walmart will find a way to automate many of the jobs they offer if the minimum wage is drastically increased. Low or no skill minimum wage jobs are the easiest to automate. Cashiers are already starting to get fazed out. The nearest Walmart to me has 8 self checkout stations (supervised by only 1 employee), so they already have developed and put in place some of the technology to automate. The losers in a drastically higher minimum wage scenario aren't Walmart, they are small businesses who cannot afford the technology that replaces low skill workers, and of course the newly unemployed workers themselves.

I dream of a day when everyone is wealthy enough that they no longer need to watch reality TV. I dream of a day when everyone is wealthy enough that they can make to-do lists for themselves. Obviously I said many of the habits, not all. So your cherry picking hasn't achieved much. But by all means, keep doing everything you can to preserve your needlessly black and white ideology. I'm going to do something more productive with my time. Hey, I think there's a Pawn Stars marathon on.

Because this dude is a financial advisor. He deals with rich clients all day. He was interviewing his clients.

http://www.richhabitsinstitute.com/about-rich-habits-thomas-corley-bio/ This is all from the book: http://www.amazon.com/Rich-Habits-Success-Wealthy-Individuals/dp/1934938939 Sample size: 233 rich people, 128 poor people. In interviews he's said he basically asked them questions, so these statistics are self reported. This was not a peer reviewed study done by a scientist or researcher. And the people he was asking are most likely his wealth advising clients, so the statistics are horribly biased. This is why so many of the stats look utterly strange. And many of the bad (good) habits are a result of being poor (rich), not the other way around. For example, it's well known amongst obesity researchers that lower income people in the US are generally heavier and consume more junk food, mainly because junk food is much cheaper. Raman noodles and a bag of Doritos are much cheaper than grilled salmon and kale. Being able to afford a gym membership, personal trainer, and a huge grocery bill at Whole Foods-these are not a cause of wealth, but an effect of having it. These statistics were compiled to sell books, not obtain truth.