Black Friday and Cyber Monday broke records for e-commerce sales, and once again, the big guys – Amazon, Walmart.com, and Target.com – got bigger.
But this year, in another sign of how much Covid-19 has changed retail, a lot of the really small guys got bigger too.
The smallest e-commerce entrepreneurs were among the biggest winners during the holiday weekend, according to Shopify, the e-commerce platform used by more than one million businesses around the world.
Shopify tracked sales on its platform from Thanksgiving Day through Cyber Monday, and is declaring the weekend a win for small businesses, many of whom are new to the platform this year.
“Black Friday-Cyber Monday 2020 belongs to the small businesses. It’s obvious,” said Shopify President Harley Finkelstein, in an interview with Forbes.com.
Shopify merchants rang up $5.1 billion in sales from Black Friday through Cyber Monday, up 76% over last year.
The biggest e-commerce giant of them all, Amazon, also called the holiday weekend a win for independent retailers, announcing in its blog today that sales by independents selling on Amazon reached $4.8 billion over the four-day period, up 60% over last year.
According to Amazon, 71,000 small and medium businesses selling on Amazon have surpassed $100,000 in sales thus far during this holiday season. Amazon did not release its total sales for the Black-Friday-Cyber Monday period, but said it is enjoying record holiday sales to date.
Shopify has seen its Black Friday-Cyber Monday sales grow five-fold since 2017, when they were roughly $1 billion.
But even more important than the sales numbers, in Finkelstein’s view, is the shift Shopify is seeing in how consumers are shopping, a shift that favors small brands and local stores.
“It’s not just this idea of the conscious consumer voting with their wallets for brands that reflect their values,” Finkelstein said. “It’s not just about buying directly from independent brands. It’s all of these things together, which is leading to all of us doing our holiday shopping in a very different way right now than ever before,” he said.
“I don’t know if the growth rate of e-commerce will continue at this pace, because this pace is astronomical, however we are not going back to a pre-Covid retail model,” Finkelstein said.
Data from Adobe Analytics confirms what Finkelstein is seeing in terms of the shift to small businesses. Adobe, in its report on Black Friday e-commerce sales, noted that while the e-commerce giants – retailers with over $1 billion in annual revenue – always outperform smaller brands during Cyber Week, this year the performance gap narrowed. “Consumers seem motivated to spend more with small retailers in 2020 as the gap shrunk by over 200%,” Adobe noted in its Black Friday report.
An Adobe survey found that 44% of consumers planned to support small and local retailers over this holiday weekend, and that 38% said they would make a deliberate effort to shop at smaller retailers throughout the holiday period.
Adobe defines smaller retailers as those with between $10 million and $50 million in annual revenue, but Shopify and Finkelstein saw gains this year from retailers that were a lot smaller, including many who were doing e-commerce for the first time this year.
Shopify saw its new users spike when the pandemic shut down non-essential retail and restaurants in March and April. Mom and pop stores, restaurants, and entrepreneurs turned to Shopify as a way to quickly create an online presence that would let them manage curbside pickups; sell home meal kits, or wines and liquor to go; or market new products.
Shopify hasn’t released the number of businesses that have created websites on its platform this year, but when it reported its second quarter results at the end of July it said the number of new stores was up 71%.
Sensormatic Solutions, the division of Johnson Controls that includes ShopperTrak, the traffic counting brand that has been measuring in store traffic for decades, documented how dramatically consumers shifted away from stores this Black Friday weekend. Store traffic was down 52.1 percent on Black Friday compared to 2019, and declined by 94.9 % on Thanksgiving, when most retailers and malls opted to remain closed.
At a time when stores had to close and shopping habits were transformed overnight, being small was an advantage, Finkelstein. “Entrepreneurs have an advantage now because they’re more nimble. They can pivot,” he said.
Some of the largest legacy retailers couldn’t, and have gone out of business, he noted.
“Instead of grabbing their surf board and riding the wave, they grabbed their towels and waited for Covid to end,” he said.
“I think we’re going to look back on this time and realize the entrepreneurs that were resilient had great success and the ones that were resistant are no longer around,” he said.
Shopify has also seen huge corporations use its platform to pivot during the pandemic. Heinz and Pepsico set up direct-to-consumer shops for their products. Chipotle created an online farmer’s market to keep its vendors in business while restaurants were closed. Schwinn bicycles began selling online to customers for the first time.
Finkelstein, who was an early user of Shopify before he worked for the company, selling T-shirts to pay his way through law school, said Shopify’s reason for being is to make it as easy a possible to start selling online.
As businesses get bigger, or when established brands such as Staples or Tom’s Shoes, want to switch to Shopify, the platform can offer more services. But for the small stores and startup entrepreneurs, the plan is keep it simple and get them online as fast as possible, he said.
Shopify then can offer those small brands economies of scale – for shipping, payment processing, third party fulfillment – because collectively, with the millions of stores that use its platform, it is the second-largest retailer in the country, after Amazon, according to Shopify.
The company, as reported in the Wall Street Journal in July, said it had 6% of e-commerce sales, compared to 37% for Amazon.
Shopify is a number two that is a long way behind the number one. Shopify, and Finkelstein, like to describe the company’s mission as “arming the rebels” – the small brands and entrepreneurs that want to take on the e-commerce empires.
It also offers an alternative for retailers and brands that want to operate outside of the Amazon umbrella, and own their relationship with their customer.
It’s hard to tell whether that retail rebel army is actually stealing share from Amazon and the other e-commerce giants, or if everyone simply is benefitting from an ever-expanding galaxy of online sales volume.
But the Black Friday-Cyber Monday numbers show Shopify’s rebel retailers are picking up speed. And that’s got to make the big guys nervous.
Article courtesy of Forbes here