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Report: Shopify Could See E-Commerce Competition from Microsoft

Microsoft’s business has diversified over the years, and recently it’s become an important partner to the retail community.

Fear of Amazon has pushed some retailers to Microsoft’s Azure cloud business and Dynamics 365 has long been an ERP and CRM staple for consumer-centric businesses. Now, the software and services giant is said to be mulling an entrance in the e-commerce arena as reports indicate that it’s thinking about building a platform to rival 13-year-old Shopify.

The Information, a tech-centric online publication, first reported on Tuesday comments from a Microsoft executive hinting at an interest in the e-commerce space. Shelly Bransten, corporate VP of retail and consumer goods for Microsoft, told The Information the company is considering an e-commerce offering of its own “because our customers are asking us for it.”

With a propriety platform for digital commerce, Microsoft would have a much stronger value proposition for retailers looking for an end-to-end tech stack with a single provider.

A move into e-commerce makes sense for Microsoft, which has been interested in the space for some time, RSR Research managing partner Paula Rosenblum told Sourcing Journal. It would provide a “path of least resistance” for retailers interested in streamlining the number of tech partners they work with, and though they’ve long talked about wanting “one throat to choke,” Rosenblum said, “the data doesn’t bear that out.”

In the race to embrace digital innovation, retailers have shifted too much of their focus to the customer experience, the former retail CIO noted, and have lost sight of what they’re selling, or should be: great products.

Still, because Microsoft already offers retail-centric solutions like order management systems, adding on e-commerce sounds like a “good decision,” Rosenblum said, “and the earlier, the better.”

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SMBs tend to become set in their ways quickly, a habit that could hinder some from switching e-commerce platforms once they find something that provides just enough functionality. And that’s really all it boils down to, Rosenblum stressed: “You don’t care about the elegance of design, you just care that it works.”

Microsoft’s rumored foray into e-commerce platforming could be a “future hedge” more so against Alibaba than Amazon, Rosenblum explained. The Chinese giant’s so-called “new retail” offering already gives sellers a complete end-to-end commerce solution that’s more “interesting” and “altruistic” than what Amazon offers, she said.

Ottawa, Ontario-based Shopify is said to command 10 percent of the global e-commerce platform market, used by more than 800,000 sellers in roughly 175 countries ranging from DTC mattress startup Leesa and automotive innovator Tesla Motors, to style mavericks Fashion Nova, Allbirds, Rebecca Minkoff, KKW Beauty and Kanye West’s Yeezy Supply.

Shopify Plus serves larger, enterprise-level customers while the regular Shopify offering caters to smaller brands.