Walmart (WMT) and Amazon (AMZN) are locked into a battle for dominance in online shopping.
Walmart was able to dominate the 90's and early 2000's through its bottom-of-the-barrel prices and massive footprint.
Amazon has dominated more recently with superior technology and a best-in-class delivery service.
Now the poles have shifted and Walmart is focusing its attention on improving its tech and online experience while Amazon has focused on its physical footprint.
"The Walmart we're building is becoming more impactful for our customers and members, more digital, more automated, and more diversified on the top and bottom line," Walmart CEO Doug McMillon said during the company's Q4 earnings call.
Meanwhile, Amazon's retail expansion is focused on Amazon Marketplace, which currently accounts for about a quarter of all online sales.
But the pair could have to make room for a third competitor in their war.
Shopify Raises the Stakes
Shopify (SHOP) is one of the top e-commerce platforms allowing buyers and sellers to find each other online.
The company, which has a $70 billion market cap, is looking to beat Amazon and Walmart at their own games and this week announced a partnership with shipping platform Shippo to grow its business.
"It goes without saying that, to succeed in commerce today, merchants must be able to get packages into the hands of their customers quickly and affordably," said Kaz Nejatian, VP of merchant services at Shopify. "Our partnership with Shippo allows our merchants to meet consumer expectations for convenience, speed, and cost without having to be a shipping expert themselves."
That last mile of delivery is the key to the whole business and could be the deciding factor in whether a consumer shops at Amazon, Walmart, Shopify or any other online destination.
Shopify is integrating Shippo for Platforms in its system. The service offers platform providers an integrated shipping solution through the Shippo application programming interface.
Shippo says its interface can provide "ongoing cost and time savings while providing the seamless shipping experience that will drive adoption amongst their customers."
Shopify Has Some Backers
Last week, asset manager Cathie Wood, chief executive of Ark Investment Management, purchased 13,534 shares of Shopify stock for about $9.4 million.
In December, Evercore analyst Mark Mahaney called Shopify one of the "highest quality assets in our coverage."
Ottawa-based Shopify has strong fundamentals, he wrote in a commentary cited by CNBC. It’s “one of the biggest structural winners from the Covid crisis.”
The stock will benefit from increased use of Shopify’s Shop Pay payment service by non-Shopify businesses, expansion of Shopify Fulfillment network, growth of Shopify’s point of sale activity and an enhanced installment payment option.
The rise of direct-to-consumer brands and individuals starting their own small businesses will also help, Mahaney said.
“We think some of these individuals are starting online stores using Shopify.”
