How Shopify Powers Millions of Small Businesses

In 2004, a young programmer in Ottawa just wanted to sell snowboards online. The tools were terrible, so he did what good engineers do: he built his own. That side project—an in-house storefront framework for a tiny snowboarding shop—became Shopify in 2006. Two decades later, the same platform is quietly sitting behind millions of businesses, powering more than 10% of U.S. online shopping and hundreds of billions of dollars in annual sales.

For most consumers, Shopify is invisible. You see the brand, the product page, the checkout—but not the infrastructure underneath. For entrepreneurs, especially small and medium-sized businesses (SMBs), Shopify is often the difference between “I have an idea” and “I ship worldwide.”

This article looks at how Shopify became the backbone of millions of small businesses globally, how its platform works—storefronts, payments, logistics, apps, and cross-border tools—and what its merchant ecosystem is doing to jobs, GDP, and local economies.

1. From Snowboard Shop to Global Commerce Infrastructure

Shopify was founded in 2006 in Ottawa, Canada by Tobias Lütke, Daniel Weinand, and Scott Lake after they struggled to launch their own snowboard shop, Snowdevil. Lütke built the store using Ruby on Rails, then turned that internal tooling into a standalone product: a customizable storefront for other merchants.

From the beginning, Shopify’s core idea was simple but radical: don’t create a big consumer marketplace like Amazon; instead, “arm the rebels”—millions of independent brands—so they can sell directly to customers and keep control of their identity, customer data, and margins.

Over time, the company evolved from “hosted shopping carts” into what it now calls “essential internet infrastructure for commerce.” That infrastructure spans:

• Hosted storefronts and custom themes

• Integrated payments and one-click checkout

• Point-of-sale systems for in-person retail

• A vast app and partner ecosystem

• Capital and financial services

• Cross-border selling tools

• Logistics integrations and fulfillment partners

The scale of that infrastructure today is enormous:

• Shopify processed about $292–293 billion in GMV (gross merchandise volume) in 2024, up from $235.9 billion in 2023 and roughly $119.6 billion in 2020.

• Cumulative GMV through the platform passed $1 trillion by 2024.

• Shopify’s 2024 revenue reached $8.88 billion, up from $7.06 billion in 2023 and $2.93 billion in 2020.

• Estimates suggest millions of merchants on the platform—Shopify itself talks about “millions,” while third-party analyses put the figure between 1.75 million active merchants and 5.5 million sellers, depending on definition.

What started as an experiment in selling snowboards is now a global “operating system for commerce” that thousands of independent tools and services plug into.

2. How Shopify’s Platform Lowers Barriers to Entrepreneurship

At its core, Shopify is a bundle of services that compresses what used to require a full IT team, a payments integrator, a retail systems vendor, plus a logistics arrangement into something you can spin up in an afternoon. Let’s unpack the main layers.

2.1 Storefronts and Multichannel Selling

Shopify’s original product is still its beating heart: a hosted storefront solution with themes, templates, and a templating language (Liquid) that lets non-technical merchants create professional stores while still giving developers deep customization options.

Key storefront capabilities include:

• Themes & Liquid: Merchants can pick from free and paid themes, then customize layout, colors, sections, and components without touching code—or, if they prefer, use Liquid and CSS for pixel-level control.

• Headless commerce: With Hydrogen (a React-based framework) and Oxygen (Shopify’s hosting for custom storefronts), larger brands can decouple the front end while continuing to use Shopify as the commerce back end.

• Sales channels: Shopify natively connects store catalogs to channels like online stores, in-person POS, and external marketplaces and social platforms—such as Amazon Marketplace, eBay, TikTok, Instagram and Facebook—via built-in sales channel integrations and apps.

For a scrappy entrepreneur, that means they don’t have to choose between “owning their site” and “being where customers are.” They can do both: own a direct-to-consumer site and push products into social feeds, marketplaces, and in-store POS from a single admin.

2.2 Payments and Shop Pay

Payments are where Shopify moved from being “a website builder” to being a true commerce infrastructure layer.

Launched in 2013 in partnership with Stripe, Shopify Payments lets merchants accept credit cards and alternative payment methods without bolting on a separate gateway.

Over time, Shopify Payments and its newer one-click checkout, Shop Pay, became one of the company’s core economic engines:

• In 2021, Gross Payment Volume (GPV) reached $85.8 billion, representing 49% of GMV.

• By 2022 GPV had grown to $106.1 billion (54% of GMV), and by 2023 to $137.0 billion (58% of GMV).

• In a typical quarter, more than half of all Shopify GMV now flows through its own payments stack.

Shop Pay, introduced as an accelerated checkout, stores customers’ shipping and payment details and works across all merchants that enable it. This gives Shopify ecosystem network effects similar to big marketplaces—but while still preserving each brand’s independence.

The revenue implication is huge. Merchant solutions revenue—most of which is payments-related—has become the majority of Shopify’s business:

• In 2024, merchant solutions revenue reached about $6.53 billion, around 73–74% of total revenue, with subscription solutions contributing the rest.

Because Shopify takes a small cut of every transaction flowing through its pipes, it’s directly aligned with merchant success: the more merchants sell, the more Shopify earns.

2.3 Logistics and the Flexport Pivot

For years, Shopify’s biggest strategic question was: should it own logistics?

From 2019 onward, Shopify acquired fulfillment and robotics assets, including Deliverr and 6 River Systems, and built the Shopify Fulfillment Network (SFN) to compete more directly with FBA and other large logistics providers.

But by 2023, the company reversed course:

• In May–June 2023, Shopify sold the majority of its logistics business, including Deliverr and warehouse operations, to Flexport in exchange for an equity stake (roughly in the low- to mid-teens percentage) and made Flexport its official logistics partner.

• Flexport integrated Shopify’s fulfillment assets into its own network and has since restructured its footprint, consolidating warehouses while still handling e-commerce fulfillment for brands, including those on Shopify.

Today, Shopify positions SFN as an integrated network of third-party logistics partners—Flexport being primary—rather than an owned warehouse system. Merchants can:

• Connect inventory to SFN and Flexport from within the Shopify admin

• See inventory and order status in real time

• Offer fast shipping and discounted rates negotiated by Shopify/Flexport

This asset-light model keeps Shopify focused on software and orchestration—while still giving small businesses access to world-class logistics without negotiating their own freight contracts.

2.4 App Ecosystem and Partners

If Shopify’s core platform is the operating system, the App Store is the app marketplace that makes it truly modular.

• The Shopify App Store launched in 2009 and now features 10,000–16,000+ apps, depending on the source and timeframe.

• Apps cover marketing automation, SEO, upsells, subscriptions, reviews, loyalty, dropshipping, print-on-demand, inventory, ERP integrations, and more.

• Shopify app partners collectively earned over $230 million in 2020, and annual payouts have since passed $1 billion.

The revenue share has evolved over time. During the pandemic, developers kept 100% of their first $1 million in annual revenue. In 2025, Shopify announced that threshold would become lifetime, and it would take a 15% cut after partners reach $1 million in cumulative revenue (with pre-2025 revenue excluded).

Even with that change, the economics remain more favorable than many other platforms—especially compared to app stores that take 30%. And because Shopify’s merchant base keeps growing, the opportunity for developers often outweighs the fee friction.

On top of independent apps, Shopify also pursues strategic partnerships, such as:

• A $100 million strategic investment in email and SMS marketing platform Klaviyo, and making it a recommended email solution for larger merchants.

This ecosystem means small brands can “assemble” enterprise-grade stacks—reviews, loyalty, subscriptions, advanced analytics—without building anything from scratch.

2.5 Capital, Credit, and Embedded Finance

Beyond storefronts and payments, Shopify also lends money to its merchants through Shopify Capital, offering cash advances and loans based on sales history.

• Shopify has extended roughly $5 billion in merchant loans and cash advances globally, according to recent statistics.

These advances are repaid as a percentage of daily sales. For small businesses, that turns Shopify into something like a vertically integrated bank for ecommerce: the same company that handles your sales data also underwrites and funds you.

Shopify also offers financial tools like balance accounts and cards (in selected markets), increasing the stickiness of its ecosystem and helping solve one of the biggest problems SMBs face: access to working capital.

2.6 AI and Shopify Magic

In the last few years, Shopify has aggressively layered on AI capabilities under the “Shopify Magic” brand:

• AI tools now help merchants write product descriptions, generate images, set up discounts, and understand sales performance.

• Sidekick, an AI assistant integrated into the Shopify admin, can answer questions like “Why did my sales dip last week?” or “Show me my best-selling products in Germany last quarter” in conversational language.

Reuters reported that Shopify’s AI features contributed to faster merchant sign-ups and helped justify continued R&D investment even as the company sought to control operating expenses.

For small businesses, these tools effectively “rent out” data science and marketing capabilities that would otherwise be out of reach.

3. Shopify by the Numbers: Merchants, GMV, Revenue, Geography

3.1 Merchant and Buyer Scale

Shopify no longer publishes an official merchant count every year, but multiple credible sources converge on a picture of a very large, globally distributed base:

• A 2024 analysis estimates around 1.75 million active merchants, with about 875,000 in the U.S., 437,000+ in EMEA, 262,000+ in Asia-Pacific and China, and 100,000+ in Canada.

• Other analyses, counting all storefronts and sellers across different tiers, estimate 5.5 million sellers globally.

• Shopify reports that hundreds of millions of consumers buy from its merchants annually—about 675 million buyers in 2023, with estimates of 875 million+ in 2024.

These numbers reveal something important: Shopify isn’t just a niche tool for hobbyists. It’s a mainstream channel through which a large chunk of global ecommerce now flows.

3.2 Gross Merchandise Value (GMV) and Revenue Growth

A quick look at Shopify’s GMV and revenue shows how sharply the merchant economy has scaled.

Table 1 – Shopify GMV and Revenue, 2020–2024

All figures in USD billions; GMV from Shopify disclosures and syntheses, revenue from SEC filings and compiled statistics.

The pandemic years created a step-change in online commerce: GMV nearly doubled in 2020 alone. But what’s striking is that Shopify continued growing off that elevated base:

• GMV growth re-accelerated to roughly 24% in 2024, its fastest rate in three years.

• Revenue has compounded at ~25%+ annually since 2020, even after divesting the logistics businesses.

By 2024, Shopify was processing a GMV volume comparable to the GDP of a mid-sized country like Finland.

3.3 Revenue Mix: Subscriptions vs Merchant Solutions

Shopify’s business model has two main components:

1. Subscription solutions – monthly SaaS fees for plans (from Basic to Plus), along with themes and some apps.

2. Merchant solutions – payment processing, transaction fees, point-of-sale revenue, financing, and other variable-volume services.

As of the mid-2020s:

• Merchant solutions accounted for roughly 70–75% of revenue, and subscription solutions around 25–30%.

• Both segments are growing, but merchant solutions are tightly tethered to GMV growth, while subscriptions grow with merchant count and plan upgrades.

This mix is crucial for understanding Shopify’s leverage: once a merchant is onboarded, the SaaS fee might be modest, but every additional dollar they sell generates incremental payments and services revenue for Shopify.

3.4 Geography: A Quietly Global Platform

While Shopify is Canadian and historically U.S.-centric, its footprint is global:

• Merchants operate in 175+ countries, according to company and partner reports.

• 2024 merchant counts point to significant penetration in Europe, the Middle East and Africa (roughly 437,000+ merchants) and Asia-Pacific (260,000+), alongside the U.S. and Canada.

• International revenue (outside North America) has been growing faster than overall revenue—roughly 30%+ in some recent periods.

Recent earnings coverage highlights particularly strong performance in Europe, where GMV growth outpaced North America in 2025, and where large brands like LVMH and Nestlé are increasingly using Shopify’s enterprise tier (Shopify Plus).

4. Turning Entrepreneurs into Global Merchants: Cross-Border and Omnichannel

It’s one thing to help someone sell T-shirts in their own city. It’s another to turn that business into a global brand that can ship to 50+ countries, charge in local currencies, and comply with tariffs and taxes.

4.1 Cross-Border Commerce and Shopify Markets

Shopify Markets and Markets Pro are the company’s cross-border management layers. They help merchants:

• Show localized storefronts and prices

• Accept local currencies and payment methods

• Calculate and collect duties and taxes

• Offer delivery duty paid (DDP) shipping options

According to Shopify and third-party analyses:

• Cross-border orders account for roughly 15–16% of all Shopify orders and GMV, depending on the period measured.

• Shopify has rolled out tools like AI-powered tariff estimators and expanded duties-collection tools to more merchants, explicitly to help them navigate shifting trade rules and de minimis thresholds.

A key insight here: small merchants on Shopify are not just selling locally anymore. They are participating in global ecommerce flows that used to be the territory of big exporters.

4.2 Mobile, Social, and Marketplace Integrations

The modern buyer often discovers brands on social platforms, reads reviews elsewhere, and eventually checks out on web or mobile. Shopify’s job is to be the connective tissue:

• As of mid-2020s, mobile accounts for the majority of ecommerce visits and a large share of orders globally; Shopify’s own content shows mobile commerce (m-commerce) surpassing $2 trillion worldwide.

• Sales channels to platforms like Meta (Instagram & Facebook), TikTok Shop, Amazon and others let merchants sync products and inventory across discovery surfaces.

Instead of building full-blown marketplace products, Shopify’s strategy is to make its merchants “channel-agnostic”—able to sell wherever attention goes next, while still reconciling orders and inventory in one back office.

4.3 Offline Retail and POS

Shopify also powers physical retail:

• It offers POS hardware (card readers, stands, barcode scanners) and POS software integrated with the same inventory as the online store.

• Offline revenue—POS subscriptions, hardware, and offline payment processing—has been one of the fastest-growing pieces of the business, with some analyses citing ~33% growth in offline revenue in 2024.

• Shopify’s offline GMV crossed $100 billion cumulative by 2024.

For small merchants, this effectively unifies online and offline into one stack: walk-in sales, pop-ups, and ecommerce orders all live in the same system.

5. The Economic Impact of Shopify-Powered Businesses

Shopify likes to talk about “the Shopify Effect”—the idea that for every dollar Shopify earns, its merchants generate many times more in sales, jobs, and local economic activity. Independent economic studies back this up.

5.1 Jobs, GDP, and Economic Activity

Shopify has commissioned several global economic impact studies, largely carried out by Deloitte and released publicly. Highlights:

• In 2020, Shopify merchants supported 3.6 million jobs worldwide and generated about $307 billion in global economic impact, according to Deloitte’s analysis.

• In 2021, merchants supported 5 million jobs and drove more than $444 billion in economic activity, a 45% increase over 2020.

• In 2022, Shopify launched the Shopify Entrepreneurship Index, tracking merchants in 40 countries. Index data indicate that Shopify’s ecosystem:

  • Supported 5.2 million jobs

  • Generated $28 billion in exports

  • Contributed $229 billion in GDP impact

  • Created $490 billion in economic activity

Table 2 – Economic Impact of Shopify Merchants, 2020–2022

Compiled from Shopify’s economic impact reports and Entrepreneurship Index.

These are not Shopify’s revenues; they are the aggregate impact of merchants who happen to run on Shopify—employees hired, suppliers contracted, and secondary spending in local economies.

In other words, Shopify is not just a tech company in Ottawa. It’s part of the economic plumbing behind millions of corner-store-to-mid-market businesses worldwide.

5.2 Local Economies and Entrepreneurship

Zoom in from global numbers and the impact becomes more concrete:

• In Canada alone, Shopify reported about 150,000 jobs supported by its merchants, with ~61,000 directly employed.

• In the U.K., Shopify-powered businesses supported nearly 200,000 jobs in 2022, including around 78,000 directly.

The Entrepreneurship Index ranks countries and U.S. states based on how vibrant their Shopify merchant communities are—jobs, exports, GDP impact—highlighting that small Shopify-powered businesses can materially move national statistics.

On the ground, that might look like:

• A local fashion label hiring its first employees because Shopify Capital funded a big inventory run

• A rural food producer exporting to urban markets abroad via Shopify Markets

• A mom-and-pop shop rolling out omnichannel POS and surviving the shift from high-street foot traffic to online orders

Shopify’s thesis—that entrepreneurship at scale is macro-economically important—is increasingly supported by these data.

6. Why Shopify Resonates with Small and Medium-Sized Businesses

Given how crowded ecommerce tooling has become, why have so many SMBs chosen Shopify over alternatives like WooCommerce, BigCommerce, Wix, or direct selling on marketplaces?

Several advantages stand out.

6.1 Low Friction to Start, High Ceiling to Scale

• Easy onboarding: A new merchant can launch a basic store in a day with a modest subscription fee and no separate server, security, or payment gateway setup.

• Enterprise headroom: The same platform powers brands like Tesla, PepsiCo, and Hyatt via Shopify Plus, with higher fee tiers and more advanced features.

Founders don’t have to replatform when they outgrow the “starter” phase; they simply upgrade plans, add apps, and plug in more channels.

6.2 Integrated, Opinionated Default Stack

Shopify offers an opinionated “default” stack—online store + payments + shipping labels + analytics—while still being flexible. That balance is particularly valuable for time-strapped founders.

• Built-in tools (themes, analytics, email basics, discounts, etc.) cover the critical 80%.

• Specialized needs (subscriptions, loyalty, wholesale portals, advanced attribution) are handled via apps.

This helps entrepreneurs avoid decision paralysis and integration nightmares—and instead ship quickly.

6.3 Success-Based Pricing

Shopify’s revenue is tied to merchant success via:

• Variable transaction fees on GMV (through Shopify Payments and merchant solutions)

• Upsells into higher-tier subscriptions as businesses grow

That creates a kind of “aligned incentives” flywheel: Shopify is financially rewarded for helping merchants sell more, not for locking them into expensive fixed contracts prematurely.

6.4 Ecosystem and Community Effects

Because millions of merchants share a common platform:

• App developers and agencies specialize in Shopify, increasing quality and lowering cost for merchants.

• Educational content, courses, and templates proliferate.

• Themes and apps can be built once and sold many times, amortizing development across a broad base.

This density is difficult for new entrants to replicate. It also gives merchants confidence that whatever they need—subscriptions, B2B portals, warehouse integrations—has likely been built already.

6.5 AI as a Force Multiplier

For micro-SMBs, Shopify’s AI suite can feel like hiring a marketing team and analyst for free:

• AI-written product descriptions and email copy save hours.

• Automated discount setups and performance reports reduce complexity.

This is particularly powerful in markets where labor is expensive and expertise is scarce—exactly where small merchants often struggle most.

7. Challenges and Strategic Debates

The story isn’t all smooth sailing. Shopify faces real challenges and strategic trade-offs as it tries to serve both tiny SMBs and large enterprises.

7.1 Competition from Marketplaces and Low-Cost Platforms

Shopify sits in a complicated competitive landscape:

• Marketplaces like Amazon and emerging ultra-cheap platforms such as Temu and Shein offer massive built-in traffic but at the cost of brand control and margin pressure.

• Lower-cost website builders offer simple ecommerce at cheaper subscription levels, though often with weaker extensibility.

Shopify’s differentiation—brand ownership, flexibility, and ecosystem depth—remains strong, but merchants feeling macro pressure (tariffs, slower demand) may flirt with cheaper options or marketplace-only strategies.

7.2 Logistics Complexity and the Flexport Bet

Shopify’s logistics experiment was expensive and ultimately partially unwound. While the Flexport partnership gives merchants access to sophisticated logistics, Shopify doesn’t control the end-to-end experience the way a fully integrated Amazon-style network would.

The strategic question: can Shopify orchestrate a best-of-breed logistics network through partners and software, or will merchants at the high end gravitate toward platforms that tightly bundle fulfillment?

7.3 Developer and Partner Economics

The 2025 adjustment to revenue share for app developers—switching from a recurring $1 million annual exemption to a lifetime cap—triggered concern among some partners.

While Shopify argues that the change funds new tools and platform investment, it highlights a tension:

• Developers are key to platform differentiation.

• Shopify also wants to capture more economics from the value those developers create.

So far, ecosystem participants mostly stay because the addressable market is too big to ignore—but the balance will need ongoing calibration.

7.4 Macro and Regulatory Risk

Shopify’s merchants are sensitive to:

• Interest rates (which affect consumer spending and merchant borrowing costs)

• Trade policy (tariffs, de minimis rules, customs processes)

• Currency swings

Recent U.S. tariff changes and scrutiny of Chinese imports, for example, created uncertainty for Shopify merchants importing via low-value thresholds. Shopify responded with tariff tools and local-first features, but GMV growth did wobble in some quarters.

The platform’s job increasingly includes helping merchants interpret policy—not just process payments.

8. The Future: From Storefront Software to Commerce Infrastructure

Where does Shopify go from here?

8.1 Deeper Enterprise and International Push

Financial press coverage and company commentary point to an explicit push into:

• Enterprise brands, competing with Salesforce Commerce Cloud and Adobe Commerce (Magento).

• International markets, especially Europe, where Shopify has seen outsized GMV growth and is expanding products like Shopify Capital into countries like Germany and the Netherlands.

The risk is stretching too far upmarket and losing focus on the SMB core. The opportunity is to become the de facto standard commerce stack across company sizes and geographies.

8.2 AI-Native Commerce

Shopify’s AI investments point toward a future where:

• Merchants start businesses by describing them conversationally.

• Campaigns, merchandising, pricing experiments, and cross-border expansion plans are co-designed by AI agents based on merchant data.

If that vision plays out, Shopify’s value becomes less about giving merchants tools and more about giving them co-pilots—intelligent systems that compress years of retail learning into suggestions and automations.

8.3 Embedded Finance and Risk Sharing

By layering on capital, banking-adjacent tools, and possibly insurance or revenue-based financing, Shopify can deepen its role as the financial backbone of its merchants.

That would further align incentives: Shopify benefits from merchants being well capitalized, and merchants benefit from Shopify having skin in the game.

9. Conclusion: A Quiet Backbone for the Entrepreneur Economy

Shopify’s story is not about a single heroic founder or a flashy consumer brand. It’s about infrastructure—software and financial rails that invisibly support millions of individual stories:

• The artist selling prints worldwide without ever talking to a bank about merchant accounts

• The local grocer turning on curbside pickup and delivery during a lockdown

• The digitally native brand launching in two continents on day one

By bundling storefronts, payments, logistics integrations, apps, and cross-border tools into a cohesive, scalable platform, Shopify has dramatically lowered the barrier to starting and scaling a business online.

The numbers—hundreds of billions in GMV, trillions in cumulative sales, millions of jobs and billions in GDP impact—suggest that this is no longer just a Canadian software company. It’s part of the economic infrastructure of the 21st-century entrepreneur economy, turning small ideas into global merchants at unprecedented scale.