Big Commerce Stock IPO (Shopify's Biggest Competitor!?)

Big commerce recent IPO made headlines. Despite being listed at only $24 a share. Big commerce managed to reach a high of $93.99 a share in the first day of trading before closing at $72 a share. So why was there such a big interest in Big commerce stock? Well the ecommerce space, which big commerce is a part of, is really taking off. And I believe the future of ecommerce belongs to companies that empower brands. Which big commerce does.

Compared to traditional ecommerce companies like ebay and amazon. Big commerce allows brands to easily build their own websites that enable them to start selling their products online. Now brands can use sites like ebay or amazon but they have to do it inside of ebay and amazon’s marketplaces. This is ok for brands but there are some downsides.

First off, there is a lot of competition. Third party sellers can undercut your prices and steal customers away from you. And what makes it worse is that amazon recommends similar items at lower prices on the same screen. So if there are two apple chargers that pop up on amazon and one is 50% cheaper, it will steal sales away from the more expensive, real apple phone charger. But when you go to apple.com, there is no competition. You have one price.

The second downside of using ebay or amazon instead of your own website is dealing with counterfeit items. And this is similar to the first problem but even more serious. If third party sellers are reselling real products then the amount they are able to discount those items will be minimal. But with counterfeit products, people can drastically reduce the price.

Shopify understands that it is hard for people to remember all of their favorite brands websites all at one. So they made an app, called the shop app that helps consumers keep all their favorite brands websites all in one place. This means that instead of going directly to amazon to look for shoes for example, you can open your shop app and easily search for shoe companies like all birds that run their sites on shopify’s platform. And if you like their shoes, you can save that store to your app as a favorite.

The reason I bring up the shop app is because I do think it gives Shopify a big advantage over the other website building companies like big commerce, squarespace, and wix. This is because moving forward, in order to compete well against amazon. Businesses will need more tools than just the ability to build their own website. And the shop app is a great example of this. The shop app gives a big incentive to use shopify instead of big commerce. This is because the shop app is in it’s own way, a marketplace of sorts. Meaning people might in the future go to the shop app to start their online search for an item. Whereas if I am using big commerce I have to rely on people using a search engine like google.

Now one of the areas that will be critical moving forward is social media. If we compare shopify to big commerce, this is an area where big commerce shines. In fact, out of the many review websites I read as research for this video, many listed social media integration as one of big commerce strengths. But that is not to say that shopify does not also do a good job with social media integration as well. Overall, a lot of the functionality you get with social media integration you can also get with big commerce. So that is a huge plus to big commerce that it has so much social media integration because like I said earlier, social media ecommerce will be a huge growth driver for ecommerce moving forward.

When it comes to my preference between shopify and big commerce, I am still sticking with shopify. Now this doesn’t mean that I won’t buy big commerce. I do own shares of Wix in my portfolio. But I have far fewer shares of wix than I do shopify. So I still like shopify a lot and I think they have a better strategy to take on amazon.

That strategy includes things like purchasing six river systems for $450 million dollars back in september of 2019. Six River Systems is a robotics and software company that specializes in warehouse operations. This is important because in June of 2019, Shopify announced a new shopify fulfillment network that qualifying merchants could use to offer two day shipping like Amazon does. And with the acquisition of six river systems, Shopify can use their self-driving robots to be more competitive with amazon. In fact, amazon acquired a very similar company to six river systems back in 2012 called Kiva Systems, that they used to add autonomous robots to their warehouses. So this is a big reason why I like shopify over all of the other custom website builders out there right now. Because they are doing things like this to really put themselves on par with the biggest player in ecommerce right now which is amazon.