Aug 27, 2021
Shopify web traffic slows in Q3 as recovery takes hold: CIBC
A massive tide of purchasing power is shifting towards online buying: Bruce Croxon
As fully vaccinated Canadians regain the confidence to step outdoors again for their consumer goods, web traffic appears to be slowing down for Shopify Inc. and its e-commerce peers, according to a report from CIBC.
CIBC Analyst Todd Coupland said in a report that year-over-year web traffic growth for Shopify in the third quarter came in around 10 per cent, down from the Canadian tech darling’s first quarter growth of 68 per cent.
Lightspeed Commerce Inc. is also in the midst of a deceleration in web traffic with third quarter growth clocking in at 57 per cent, compared to 92 per cent and 155 per cent in the second and first quarters, respectively, CIBC said.
Although overall web traffic may be down, CIBC said Shopify continues to outperform its traditional retail rivals in the consumer discretionary segment in the third quarter, as fashion, cosmetics and home furnishings segments -- which make up a large portion of Shopify’s customers -- continue to see strong sales.
"This is meaningful as according to Target, shopping habits are shifting away from the household essentials consumers stockpiled during the pandemic, and towards the fashion and cosmetics categories that represent a large mix of Shopify’s merchant base," said Coupland.
Coupland chalks this digital slowdown up to high vaccination rates in Canada and the U.S., which is giving consumers the confidence to return to the brick-and-mortar retailers they shunned throughout the pandemic.
Some large U.S. retailers who recently reported quarterly results have shown signs of that shift in consumer habits. Both Home Depot Inc. and Walmart Inc. reported total sales were higher in their second quarters, but online growth had stagnated.
That said, CIBC points out that same group of retail giants are seeing positive developments amid back-to-school shopping.
“A boost from the back-to-school (and for some regions, back-to-college) shopping period will be critical to lifting retailers’ Q3 sales volumes, given the soft start so far this quarter.” Coupland said in his research note.
After booming in 2020, growth has been comparatively harder to come by for some major Canadian e-commerce players this year. Still, Shopify is up more than 38 per cent year-to-date, while Lightspeed shares have advanced by 50 per cent over that same period.