'Merchants Are Suffering': Shopify's CEO Warns About Deteriorating Macro Backdrop
Shopify's co-founder and CEO offered a grave warning about online merchants on its e-commerce platform. He said the current macro backdrop of supply chain chaos and inflation is producing hardships for its merchants.
"The challenges are, of course, real. There are pressures in the supply chain. There are increasing logistics costs and things like this," Tobi Lutke told analysts during Shopify's earnings call Thursday morning. "Inflation is harder for us to judge. There are probably some inflationary things going on. We have no idea if they are shorter or longer term."
"I do think a bunch of people are suffering," Lutke told analysts, referring to the challenging macroeconomic backdrop for merchants on the e-commerce platform.
Despite the challenges, CFO Amy Shapero told analysts that the long-term outlook for Shopify and e-commerce would remain strong, adding that expanding the company's global footprint will support future results. "E-commerce's share of overall retail has reset lower than the peak last year, but is still several points higher than it was two years ago and is poised to resume a more normalized rate of growth," Shapero said.
Shares of Shopify are up more than 9% after earnings posted weaker-than-expected adjusted earnings in the third quarter, which was the first time since going public in 2015.
Lutke's grim outlook on supply chain woes and inflation is another example of how these issues persist. The impacts of delayed shipments and higher costs have unleashed margin compression for Shopify's merchants, who have to either painfully eat the added costs or pass it along to consumers.
For more on the inflationary landscape, Bank of America's latest inflation tracker is stuck at the highest reading possible, "non-transitory" inflation doubled to 75 in June. This means that transitory inflation is becoming a losing argument as more persistent inflation is here and will likely continue through year-end.
And while it remains to be seen if inflation and supply chains snarls will abate anytime soon, one thing is for sure, these twin terrors could unleash a slowdown in the economy that would make life miserable for many under a regime called stagflation (for a quick preview of what is coming, please read "Is Stagflation Here: Comparing The 2020s With The 1970s...").
As for the merchants on Shopify, the challenging economic landscape will persist well into 2022. What does this mean for consumers who want to buy items on the e-commerce platform? Well, it's going to cost more.
https://ift.tt/3bqcsEc
from ZeroHedge News https://ift.tt/3bqcsEc
via IFTTT
0 comments
Post a Comment