Are Shopify’s China Deals Making It A Real Threat To Amazon?

The pretender to Amazon’s e-commerce throne in North America has set its eyes on more lucrative markets in the East.

Nov. 18, 2020

Shopify (NYSE: SHOP), considered one of the most promising threats to Amazon’s e-commerce stranglehold in North America, announced yesterday that it will now integrate its merchant platform with Alipay. This means that Shopify’s U.S.-based sellers will be able to directly receive payments seamlessly from Alipay’s more than one billion annual active users in China alone.

The deal also facilitates future expansion into Alipay’s other Asian markets and the hundreds of millions of customers there, including Hong Kong, India, South Korea, Indonesia, the Philippines, Malaysia, Thailand, Pakistan, and Bangladesh.

Why is this important for Shopify investors?

Despite reporting blowout earnings in late October, Shopify’s stock price has fallen 15% in the past month, largely due to market-wide tech sell-offs caused by vaccine news as well as election-related volatility. 

In that time, it has also announced a partnership with TikTok, which allows Shopify merchants to create, run, and optimize their TikTok marketing campaigns directly from the Shopify dashboard and will eventually expand to include other in-app shopping features as well. You can read our full thoughts on that here, but the gist of it is:

Take that Amazon. 

Shopify is making moves in China, a region that Amazon has no foothold in. It could now become the leading — and perhaps only — Western e-commerce business that has a wide merchant network in China, the world’s fastest-growing economy. Coupled with its recent TikTok partnership — a famously Chinese-owned company — it’s clear that the Canadian Shopify has got its eyes on the massive Asian market with these two deals. Let’s look at the potential:

  • There are 1 billion Alipay users in China who can interact seamlessly with Shopify’s almost 1 million merchants worldwide. 
  • China’s e-commerce market is estimated to be worth $1.62 trillion by the end of 2020, compared to $800 billion in the U.S.
  • Earlier this month, China’s annual Single’s Day sale generated a monstrous gross merchandising volume of $74 billion over the course of the 11-day campaign, compared to the $17.6 billion generated between Black Friday and Cyber Monday in the U.S. in 2019. 

There’s certainly a lot to take in there, and though Shopify is a long way from toppling Jeff Bezos off of his smiley-faced throne, this could well be the start of something massive for a company whose stock became the first 20-bagger in the MyWallSt shortlist last June, just 4 years after we added it.

What’s even better for the long-term bulls? Its stock has barely moved following the announcement…

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Netflix. Read our full disclosure policy here.