While Shopify Inc. reported robust 2023 financial results, with total gross merchandise volume on its clients’ ecommerce sites up 23% to $75.1 billion, it noted even strong growth in its B2B business.

Harley Finkelstein, president, Shopify Inc.

Harley Finkelstein, Shopify’s president, said on a Q4 and  year-end earnings call this week that the vendor’s B2B gross merchandise volume doubled last year. He added that, in the fourth quarter, Shopify’s business with B2B companies “was up nearly 150% year over year.”

Shopify did not immediately reply to a request for specific figures on B2B-related revenue and GMV, but executives said on the earnings call that that they see the B2B market playing an increasingly vital role in Shopify’s growth plans.

An ‘exciting’ B2B growth opportunity

Finkelstein — referring to B2B as a “big and exciting growth opportunity” — said Shopify is experiencing B2B market growth with two types of companies: existing Shopify retail merchants adding a B2B channel, such as The Home Depot, home furnishings retailer Lulu and Georgia, and jewelry retailer BaubleBar; and newcomers to Shopify like Carrier, a global manufacturer of heating and cooling and other building-management systems.

He added that getting a client company like Carrier, which signed on as a client in Q4, was “opening the door to a whole new opportunity of industries we previously didn’t serve.”

Jeff Hoffmeister, Shopify’s chief financial officer, added that Shopify is seeing more demand from large enterprise B2B companies for the vendor’s multiple technology offerings, including Shopify Plus, international B2B sales, online payments, and physical store point-of-sale systems that integrate with Shopify’s ecommerce platform.

“All those things are the growth engines for the future,” he said.

Shopify says its store point-of-sale terminal is designed to integrate with the Shopify ecommerce platform and support “over 1,000 physical stores.” Referring the POS systems as new “on-ramps or entry points into Shopify,” Finkelstein said they “substantiate our role as the unified commerce operating system for merchants, whether they come to us to sell online, off-line, or anywhere in-between.”

He added, “We are building on our commitment to help merchants sell to all of their customers from a single, unified commerce platform, with upgrades to our B2B offering, including headless B2B storefronts and support for sales reps.”

Among other new features, the ecommerce technology company has also launched for merchants on the Shopify platform:

• Shopify Bill Pay, an expense management tool that lets merchants pay their vendors directly from their Shopify administrative application.
• Shopify Credit, a “pay-in-full” business credit card designed to help manage monthly cashflow and earn cashback savings without paying interest or fees.
• Shopify Collective, an application that enables merchants to source products from other companies on Shopify and have them shipped directly to customers.

Perks of unified commerce and integrated POS

A unified commerce environment, including integrated POS systems, can play a vital role for B2B companies trying to keep up with omnichannel commerce that extends to their physical branches and other outlets, B2B industry experts say.

“Key aspects such as ERP integration, branch-selling, and tools that aid the end customer in their job are crucial for a successful B2B platform,” says Justin King, managing partner of advisory firm B2X Partners. “Shopify’s acknowledgment and incorporation of these elements, along with their significant growth in B2B GMV and the acquisition of B2B-only merchants, position them as a potentially formidable player in the B2B e-commerce technology sector. Their commitment to providing a unified commerce platform for both online and offline B2B transactions further solidifies their intent to capture and expand their market share in this domain.”

Jay Schneider, the founder of digital advisory firm B2BSquared, adds that the Shopify platform still needs to show that it can handle complex online B2B interactions, such as those involving displays, configurations and quoting of products with extensive lists of attributes and complex pricing.

Finkelstein said that Shopify generated $441 million last year from its offline offerings, including POS hardware, “more than five times what our offline revenue was just four years ago.” Shopify estimates its total addressable market for offline and B2B business at “over $450 billion,” he said, adding, “We have barely scratched the surface of this opportunity and expect it to be a key growth driver in 2024.”

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].

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