When Kylie Jenner sold a controlling stake in her four-year-old makeup startup to French beauty conglomerate Coty in November for $600 million at a $1.2 billion valuation, the 22-year-old CEO emerged a billionaire. The sale of Kylie Cosmetics was an extraordinary achievement for the reality star turned entrepreneur, one that’s even more notable for the fact that her company has just 12 full- and part-time employees. To build a hyper-efficient online brand, it helps to have the Kardashian-Jenner influencer juggernaut in your corner, of course. But perhaps just as important is Shopify, the Canadian e-commerce logistics startup that powers everything from Jenner’s website to the payment systems used in all of her pop-up shops.
Kylie Cosmetics’ rise is exceptional, but far from unique: Shopify works with some of the most successful direct-to-consumer startups, including Allbirds, Bombas, Brooklinen, Outdoor Voices, and Rothy’s (No. 33). It also powers stores from legacy companies, including Budweiser, The New York Times, and Nestlé. Shopify signed its millionth merchant in 2019—it has sellers in 175 countries—and generated nearly $1.6 billion in annual revenue, up from $1.1 billion in 2018. (The company makes money from monthly subscriptions, as well as additional fees for premium features.) Deloitte estimates that between 2016 and 2018, companies on Shopify enabled $183 billion in transactions and created full-time jobs for 1.4 million people. In the four days from Black Friday through Cyber Monday last year alone, Shopify merchants sold more than $2.9 billion worth of goods to 25.5 million people, up from $1.8 billion the year before.
Tobias Lütke, cofounder and CEO, who began building Shopify in 2004 to make it easy for entrepreneurs to design e-commerce sites without hiring professional developers, still has a long way to go to catch up to Amazon, which controls half of all e-commerce sales in the United States and was responsible for an estimated $300 billion in transactions last year. (Shopify did approximately $60 billion in gross merchandise volume in 2019.) But Lütke’s company has emerged as a powerful alternative for merchants across the globe who view Amazon with growing suspicion. While the e-commerce giant pushes brands to lower prices, put up with counterfeits (and Amazon-branded knockoffs), and spend heavily on Amazon’s ad and warehousing services to stay relevant in the site’s search results, Shopify remains focused on empowering merchants. “We are arming the rebels,” says Harley Finkelstein, Shopify’s chief operating officer.
As brands have grown on Shopify, the company has launched tools to help them scale. It has added an array of payment and logistics solutions (including premium subscriptions for larger merchants) that work across digital and brick-and-mortar stores. Shopify Capital, which it launched in 2016 to offer small- and medium-size businesses loans with the option to repay from future sales, has already doled out more than $760 million. In January, the company extended the service to entrepreneurs with no credit or payment history or collateral by offering them $200 starter loans, allowing the most nascent of enterprises to join its e-commerce ecosystem. While Shopify continues to introduce new features to its platform—such as a chat function, launched last year, that allows merchants to have real-time conversations with customers— the company also has a marketplace with more than 3,000 third-party apps that assist sellers with everything from accounting to hosting raffles. Shopify even has an analytics arm to help merchants identify which social media sites are fueling sales and assess where to spend their ad dollars. “Shopify is no longer just an e-commerce platform,” says Finkelstein. He prefers to refer to the company as “the world’s first retail operating system.”
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