Private Equity Catching Up to B2B Commerce, Shopify Works to Keep Pace

One of the trends which seems obvious to me is the ascendancy of non-traditional categories in eCommerce. I call it "all categories Amazon doesn't own".

Simply, there are thousands of categories that you would never even think about as a consumer which have not yet been digitized. Many are controlled by corporate supplier procurement, others need many more steps, validation, order routing, delivery services, and other flexibility compared to a simple checkout process to ship to the typical consumer's home with a driveway and mailbox. Often due to regulation or arcane standards which govern those industries.

Private equity is catching on to the huge opportunity here and investing behind it.

Back to software... Shopify announced some basics of B2B, wholesale/price lists... some of which tbh I can't believe they didn't already have. It's not this part that is so interesting.

The most interesting part to me is how Shopify has committed to opening up parts of its backend as functions (still developer preview). To maintain the most performant platform, you have to build one that doesn't rely on a rat's nest of different clouds and customer code with different performance, hosting, security, and other criteria.

This required Shopify to build Functions on top of their own hosting infrastructure, and allow merchants to host their own code in it which is called by or replaces key pieces of Shopify's infrastructure.

Although the feature is only in developer preview now, the approach is interesting and powerful.

In the B2B cloud space, in particular, they do have real direct competition from BigCommerce -- despite the obvious size differences in the firms. In both front-end and backend, BigCommerce has had a relatively open stance from the beginning which Shopify, after capturing a lot of the "off the shelf" market has started to move to. The reality though a lot of commerce is still happening on custom platforms, and this is a big opportunity too.

Some things to watch here for sure, and yes there is a risk to Shopify for spreading itself too thin... but I can pretty much be sure that even competition which might say this is "too little too late" doesn't really want Shopify to invest here either, because they know that sustained investment threatens their business in the long term.