Amazon's Latest Acquisition Sets Up Potential E-Commerce Showdown With Shopify—and Has Branded Merchandise Implications

Shopify, the e-commerce platform that powers online stores for merchandise sellers, had a huge 2020, growing revenue by 86% (to $2.9 billion) and gross merchandise value by 99% (to $41 billion). Chances are, you've bought something from a Shopify webstore at some point over the last year, maybe without even noticing.

Even if you didn't notice, though, Amazon did.

In January, Amazon quietly purchased Selz, a small Australian startup that, like Shopify, allows businesses to easily set up online stores. Amazon actually had a similar service, called Webstore, that it launched in 2006 but shut down in 2015 in favor of its current model, which requires third-party merchants to sell directly on Amazon's marketplace.

Shopify's model is the opposite. The platform integrates into sellers' own sites, allowing them to manage products, payments, inventory, shipping and most other e-commerce functions on the back end. The company has essentially positioned itself as the anti-Amazon, focusing on great user experience not just for customers, but for sellers on the platform.

That focus has helped Shopify become the second-largest U.S. e-commerce platform after Amazon. And while Amazon is still far larger, it seems to be feeling some heat—or, at minimum, realizing that there are revenue opportunities to be had with the Shopify model. That would explain Amazon's acquisition of Selz, anyway.

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What exactly the company plans to do with Selz is still unclear, but we have some guesses. First, the obvious answer: Amazon can now give merchants the option to sell outside its marketplace again, as it did with Webstore. (In a fun twist, when Amazon shut down Webstore in 2015, it helped transition sellers to other e-commerce platforms—including Shopify.) That would allow Amazon to attract third-party sellers who might otherwise be iffy about its current model.

The less obvious answer—and the one most relevant to the promo industry—requires connecting some dots. Shopify offers a wide variety of services for its sellers, but it doesn't yet have the ability to produce merchandise. Sellers must provide that themselves, creating or sourcing it on their own. Amazon, on the other hand, has spent the last decade building out its own in-house custom merchandise operation (including Merch by Amazon), which we've covered extensively. And it's made significant investments in digital and on-demand printing, most recently committing $400 million for Kornit digital printing equipment and services.

If Amazon wanted to, it could integrate those services with those offered by Selz to create an all-in-one e-commerce option for sellers that's even more inclusive than Shopify's. Shopify is currently home to a huge number of branded merchandise stores—for restaurants, bands, influencers, etc.—all of whom must have their merchandise produced elsewhere before hosting it on their Shopify storefront. While Shopify offers some integrations and partnerships that assist in the process, Amazon could simply offer one-stop merchandise-creation services as part of the package.

Plus, with its established and efficient logistics capabilities and massive distribution network, Amazon could potentially streamline fulfillment and delivery for standalone e-commerce sellers on its Selz platform even better than Shopify can.

For now, this is speculation. But considering the breadth of Amazon's product offering and resources, not to mention its obvious ambitions to be the singular name in American e-commerce, none of this would be terribly surprising if it comes to pass. If nothing else, Amazon's Selz acquisition reinforces what promo distributors already know: the online stores business is booming—and businesses selling online want an easy, Shopify-like user experience.