Markets

Shopify: The Biggest Winner from the Twitter Buy Button

Shopify Inc.SHOP , an e-commerce platform, has recently entered into a partnership with Twitter TWTR to allow Shopify merchants to showcase and sell products directly from the social network page. As a part of this deal, Twitter's "Buy Now" service will be accessible to U.S. users, who will now be able to purchase goods from Shopify merchants by tapping the Buy button. Following the news, the company's share price went up nearly 4.6% yesterday.

At no additional costs, the feature will allow Shopify merchants to sell any product, which has been tweeted from its store on the social network site through the Twitter sales channel. Shoppers will be directed to the merchants' page for making the purchase or they can checkout directly from the Twitter platform or app, as per merchants' discretion. Shopify will undertake the responsibility of processing the payments.

As of now, Shopify powers e-commerce sites for 175,000 merchants who already avail this feature to interact with customers. The partnership will allow Shopify merchants to sell their products directly to users on the Twitter timeline. This initiative will further allow businesses to conduct transactions on the social media platform itself, turning their Twitter Pages into online stores. We believe this initiative will boost Shopify's engagement levels and increase its foothold in the e-commerce space.

Recently, Shopify and Facebook, Inc. FB also entered into a partnership. The two entities came together for the Shopify Facebook Store to enable Shopify merchants to trade products from their Facebook pages. Also, in June, this year, Shopify had said that its merchants will sell their products on Pinterest using Buyable Pins.

Will Shopify Benefit?

Twitter's growing user base makes it an attractive platform for e-commerce companies. At the end of the second quarter 2015, the company's average monthly active users (MAUs) were up 15% on a year-over-year basis to 316 million. Average mobile MAUs represented around 80% of total MAUs.

Per eMarketer, global business-to-consumer (B2C) e-commerce sales will hit $2.4 trillion by 2017, which presents a significant growth opportunity for Twitter. This in turn will benefit Shopify and will be a key growth driver for the company.

Moreover, the increasing adoption of technology and the booming e-commerce market across the globe suggests that Shopify's partnership with these social network sites may just be the right thing to do. Per eMarketer, the global retail e-commerce market is expected to touch $2.5 trillion by 2015, from just $1.1 trillion in 2013.

Last Words

Established in 2006, Shopify provides software tools for e-commerce retailers (including storefronts), payment processing and apps for checkout.

In May, this year, the company priced its initial public offering (IPO) at $17 a share. Along the way, it sold 7.7 million shares, raising $130.9 million. This gave Shopify a market valuation of approximately $1.26 billion. Shopify shares are listed on the Toronto and New York stock exchanges, with the tickers SH and SHOP, respectively.

We believe that Shopify will have a lot to gain from this initiative. Also, the move will provide an opportunity for Shopify merchants to reach a wider section of consumers and boost their sales.

Shopify currently has a Zacks Rank #3 (Hold). A better-ranked stock in the Technology sector is NetApp NTAP sporting a Zacks Rank #1 (Strong Buy).

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NETAPP INC (NTAP): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

TWITTER INC (TWTR): Free Stock Analysis Report

SHOPIFY INC (SHOP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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