Stratechery Beyond Aggregation: Amazon as a Service
Apr 25, 2022
Explore Amazon's missteps in competing with Shopify, particularly its WebStore service failure. Discover how Shopify evolved from a SaaS model to gain market traction while Amazon pivots to initiatives like Buy With Prime. Delve into Amazon's logistics expansion as it takes on delivery giants and its impact on e-commerce dynamics. Finally, examine shifting consumer expectations for shipping and returns, and how competitors struggle to meet these demands amidst a landscape shaped by Amazon's standards.
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Amazon's Webstore Closure
- In 2015, Amazon shut down its WebStore service, directing customers to Shopify.
- This seemingly strategic blunder, including a $1 million payment to Shopify, proved beneficial for Shopify's growth.
Shopify's Revenue Shift
- Shopify's business model has shifted from SaaS to commission-based.
- Merchant solutions, primarily payment processing fees, now significantly outweigh subscription solutions.
Amazon's AWS-like E-commerce Model
- Amazon's business model, like AWS, leverages massive fixed costs and economies of scale.
- Serving its own e-commerce business first justifies these costs, then externalizing the service deepens the moat.