TORONTO - When web shoppers buy a plush Angry Birds toy, a Foo Fighters or LMFAO T-shirt, or something from Encyclopedia Britannica, it helps fuel a small but growing Ottawa company that once sold snowboards before getting into the e-store business.
That company is Shopify, which this week was named by Fast Company magazine as one of the 10 most innovative retail businesses in the world.
Co-founder Tobias Lutke created Shopify after realizing back in 2005 just how difficult and expensive it was to launch a web business. After figuring it would cost at least $100,000 to get his snowboard store online, Lutke decided the company ought to design its own e-commerce software.
He quickly realized there was a much better business in helping other entrepreneurs sell their wares online and left snowboards behind.
"Today, almost six years later, we have over 20,000 active stores selling one or more products every month in more than 80 countries," said Harley Finkelstein, Shopify's chief platform officer.
"In 2010, our stores did $130 million in gross merchandise value, in 2011 it was $270 million, so it's a really, really quick growth rate."
The company pitches itself as a simple, low-cost tool to start and host a web store; if you can handle email you're technically savvy enough to create your own online store with Shopify, Finkelstein said. Pricing starts at $29 a month with a two per cent transaction fee, and maxes out at $179 monthly with no transaction fee.
The company believes there's a lot of growth to come, given that online sales still represent just a tiny fraction of overall retail revenues, Finkelstein said.
There's also major potential in helping smaller-scale entrepreneurs sell products to a potentially large audience online, he added.
"I think part of the reason we've been successful is we stuck to our value proposition, we've stuck to the fact that we want to make e-commerce very easy, and I think the other part of it is the pie itself is growing," Finkelstein said.
"Mom-preneurs, aspiring student entrepreneurs, anyone that has an idea or something to sell can now build an online store and they don't need $100,000."
While about 98 per cent of its 20,000 or so clients would be considered entrepreneurs or small businesses, Shopify's biggest coup to date is signing up Rovio, maker of the mobile video game franchise Angry Birds, which has surpassed 700 million downloads. The high-profile client has helped make the case that Shopify is a tool for businesses of all sizes.
"They said the site needed to look exactly like the game does and with all these bells and whistles and literally 48 hours later, the shop at angrybirds.com was up and running and now they've sold over two million plush toys," Finkelstein said.
"It was a really great endorsement that ... Shopify allows you to do millions of dollars of sales without a hiccup and that was really important for us. We do have big brands now, Encyclopedia Brittanica, for example, that are now joining Shopify -- and again they're not our target demographic -- and the fact that these guys who would've traditionally used an enterprise platform are now swimming downstream to using Shopify is a great endorsement."
Shopify now has about 100 employees following the recent acquisition of another Ottawa-based tech company, Select Start Studios. Known for its mobile app design, Select Start Studios created iPad and iPhone apps being used by doctors and nurses at the Ottawa Hospital.
Shopify's current plans are to boost its mobile development and grow its client base by about 25 per cent in the months ahead.
"I think what we're doing is very compelling," Finkelstein said.
"Our growth right now is amazing, we hope to be at 25,000 shops by the summer and grow from there.
"And it's not just about getting them, it's also about making sure they stay and become successful."
