Shopify (NYSE: STORE) is a software company that serves e-commerce companies. And it is one of the most important players in the world. In the past four quarters alone, the software has facilitated more than $270 billion in gross merchandise volume – the dollar value of all transactions combined.
That certainly gives Shopify a big piece of the ecommerce software pie. And as competitive as the business world can be, you’d think Shopify would have taken off with a relentless drive to get ahead of its rivals. But in reality, the company has a long history of seeking partnerships wherever possible, even if it is with direct competitors.
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It’s somewhat counterintuitive. But Shopify’s management believes that the best way to grow its business is to provide its customers with as many options as possible. And to offer more options than they could on their own, it looks for ways to work together.
This collaborative spirit still thrives at Shopify. Here are three partnerships the company has forged in recent months.
Roblox (NYSE: RBLX) is a video game platform, but not like the games I grew up with in the 1980s. On the contrary, games tend to be more interactive, social experiences. And with almost 90 million daily active users, it is certainly popular.
The fascinating thing about Roblox’s business model is that games are made by third-party developers. Roblox is free to play. But certain game elements can be purchased for the in-game currency, giving developers a chance to make some money.
Now, Roblox is expanding opportunities for its developer community by partnering with Shopify. Just announced in September and launching in 2025, developers can sell physical products with integrations with Shopify.
For Shopify, this is truly a no-brainer partnership. Roblox is not a competitor at all. But it will still bring a new use case and a potentially expanded audience for the e-commerce player.
In 2006, technology giant Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) – and subsequently Google – acquired upstart video sharing platform YouTube. Now YouTube is an important part of the business. And in August, it expanded its existing partnership with Shopify.
By 2022, YouTube had already made it possible for content creators to connect their Shopify sites to their YouTube channels. But now Shopify Plus and Advanced sellers can become YouTube partners, making it easier for content creators to showcase products.
Shopify Plus is one of the subscription levels that Shopify customers can select. And these customers will appreciate the opportunity to better reach YouTube’s audience. The integration between video and commerce is a secular trend that is becoming increasingly popular. And it’s not surprising to see Shopify coming out on the right side of the trend.
Roblox is not close to a Shopify competitor. YouTube has its own commercial arm, so it’s a bit closer to a rival. But financial technology (fintech) is a pioneer PayPal (NASDAQ:PYPL) is much more of a direct competitor to Shopify, as both companies have business customers and both process payments. But both companies have a history of looking for ways to work together. Consequently, Shopify and PayPal are enemies.
In September they became even closer enemies. Shopify divides its business into two main parts: subscription services and merchant services. Merchant services is the larger business of the two, with Shopify Payments making up a large portion. The expanded partnership makes branded PayPal checkout an additional option in Shopify’s checkout process.
For PayPal, it’s possible (if not likely) that this will only be selected a fraction of the time within Shopify Payments. But no matter how big Shopify is, even being selected occasionally can be helpful. And Shopify is simply trying to please as many customers as possible by not being restrictive with the options it offers.
Are these new partnerships game changers for Shopify? Not necessarily.
Which of these partnerships is the biggest deal? I think it’s too early to say if the biggest deal is with Roblox, YouTube or PayPal.
The takeaway is much simpler for those considering investing in Shopify stock. The stock has risen more than 4,000% since it went public in 2015. It has risen thanks to sensational growth. And a big part of the growth story is that the management team wasn’t afraid to develop alliances across the business world.
This approach has served Shopify well in the past. So investors should be optimistic about the future as the company continues to find partners, as evidenced by recent deals with Roblox, Alphabet’s YouTube and PayPal.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, PayPal, Roblox, and Shopify. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2024 $70 calls on PayPal. The Motley Fool has a disclosure policy.
Shopify’s growth is picking up again and it has partnered with three tech giants to keep the momentum going. originally published by The Motley Fool
