The eCommerce rat race

Published on September 6, 2023 · 2 mins

If you’ve been following e-commerce news lately and your head is spinning, you should know it’s not you—it’s them. The stack of press releases keeps growing by the day. So, just like we spent the last newsletter talking about Shopify’s SMB-vs-enterprise strategy, we’re spending today’s newsletter looking at the broader e-commerce technology landscape.

Here’s the thing: there was a simpler time in this industry when everyone stayed in their lane. Shopify used to be an e-commerce platform for SMBs, Amazon used to be a marketplace, and social networks used to be ad-serving machines. And for a long time, the pie was growing quickly enough for everyone to be content with this single-threaded strategy.

It’s hard to pinpoint exactly when this changed: post-pandemic headwinds definitely played a part, but we also believe it has to do with the eCommerce industry maturing and brand operators demanding more sophisticated capabilities of their vendors.

This combination led service providers to pursue a different, more aggressive strategy. This usually means one of two things:

Launching new products for existing customers, helping them succeed, and growing their top line through transaction or service fees.
Using their existing products as a wedge to grow into a new market segment that offers incremental or more predictable revenue.

This isn’t just about revenue, either: data has always been gold and is even more valuable with the AI renaissance. The more pieces of the consumer experience you own, the more data you can gather. That data can be used for performance and operational improvements, allowing you to command a greater market share.

We’re seeing more and more of these plays unfolding lately: TikTok and Facebook want to become e-commerce platforms, Amazon wants to win Shopify customers with Buy with Prime, Shopify wants to move upmarket with Commerce Components… Everyone’s simultaneously imposing their products on the market and letting the market pull new products out of them.

Time will tell which of these strategies will stand the test of time: honestly, we don’t really see Facebook becoming the new Shopify any time soon.

Still, for all the headwinds this industry has experienced, it’s an exciting time to be in e-commerce. The constant launches coupled with a pretty fervent M&A landscape mean that the cream is rising to the top, equipping operators with even more, even better tools to succeed—in most cases, at least