Shopify
SHOP
recently announced that it has partnered with
Alphabet
GOOGL
division YouTube to enable merchants to sell through the video platform. Shopify intends to tap the growing number of content creators who influence consumer buying patterns significantly.
Shopify’s recent partnership with YouTube is built upon an already existing one with Google. SHOP has already integrated its local inventory data with Google features, which allows customers to know when a particular product is available.
With the launch of YouTube Shopping on Shopify, merchants can integrate their online stores with one of the biggest entertainment platforms. This will enable merchants and content creators who have launched their own products to access a huge pool of potential customers.
Merchants can not only tag and pin their products during live video streams but also pre-record videos showcasing a curated list of products linked with the on-demand videos. They can also add a store tab under the YouTube channels to feature their products.
Commerce is currently a multichannel event, and YouTube is one of the most influential channels worldwide. Brands are trying to create meaningful engagement with consumers, which puts content at the center of brand interactions. Content creators are now openly selling goods and building their own brands or affiliating themselves with existing ones to sell products to customers using D2C channels.
Will the Deal Drive Shopify’s Share Price?
Shopify’s e-commerce business boomed during the COVID-19-induced pandemic as global brands and small stores set up online platforms to sell products due to retail markets closing down.
However, once the economy opened and retail stores started winning back their lost customers, Shopify lost its momentum. Inflation and possible signs of recession have aggravated the current market scenario, which in turn slowed down growth in the e-commerce market.
As a result, investors are currently wary of the future growth of the company. Shopify’s stock plunged 78.1% compared with the Zacks
Internet Services
industry’s decline of 18.4% in the year-to-date period.
The company is facing increasing competition from another e-commerce giant
Amazon
AMZN
.
With the potential and changing dynamics in the global e-commerce sector with creators influencing the rapid growth of D2C channels, Amazon has been stepping up its efforts as well to attract more influencers to its e-commerce platform by offering signing bonuses and vacations.
To counter rising competition and current macro-economic turmoil, Shopify has been investing heavily in building strategic integrations with major tech companies to provide new services, like the
Twitter
TWTR
sales channel, Apple’s iPhone tap-to-pay feature and Alphabet.
The Twitter sales channel enables merchants to connect with consumers directly from their Twitter profiles. Shopify noted that it was the first time a commerce platform has partnered with a social media company.
The recent integration with Apple enables shoppers to use Apple smartphones against the terminal to pay for goods. While this may not be a new feature in retail but Apple’s recent Pay Later installments added a whole new dimension to retail marketing.
Although the short-term growth prospects look bleak for the company under the current market scenario, the recent integration with YouTube will help it generate new revenue sources in the long haul, thus impacting revenue growth positively.
Shopify currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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