Shopify exec explains why entrepreneurship isn't 'anywhere close to peak'
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It's never been easier to start a business, says Loren Padelford, vice president and general manager of revenue at Shopify (SHOP), which powers digital storefronts for over 1.7 million businesses across 175 countries.
As existing business owners had to close their doors amid the coronavirus pandemic, millions of Americans found themselves out of work. This created increased appetite for an already ballooning market for entrepreneurs creating companies online.
Indeed, the number of people applying to start a business in 2020 eclipsed 2019's total by mid-October. As a one-stop shop to set up a store, facilitate customer support and payment processing, Shopify has become a crucial tool for small businesses.
"We do think it's a great time to be an entrepreneur; more businesses are being started now than have been in the last decade. That is a signal to the world that the barriers to entry are no longer as big as they used to be. And you can be a big brand and create a big story relatively quickly," Padelford said during Yahoo Finance's All Markets Summit: Small Business Recovery, which aired Thursday.
During Shopify's first-quarter earnings report, the company announced it made $988.6 million in revenue, more than doubling from a year ago. Gross merchandise volume was also up 114% year-over-year hitting $37.3 billion in the quarter.
"It's a great time to be an entrepreneur," Padelford said. "It's a great time to start something and we see that accelerating, not slowing down."
Eunice Byun built her business on Shopify and has seen it flourish during the pandemic. As co-founder and CEO of Material, a 4-year-old kitchenware line, she saw 100% growth between 2019 to 2020, and a repeat customer rate as high as 64% year-over-year.
"We saw early on in the pandemic our sales up 350% just immediately because people recognized that they may not have the goods and the equipment that they needed," she told Yahoo Finance.
As families were stuck at home, many turned to upgrading their daily staples. The ultra popular Always Pan by Our Place (a brand that's also hosted on Shopify) is a prime example of a runaway winner fueled by Instagram ads and influencer marketing.
When asked whether the market for direct-to-consumer shopping is too saturated, Padelford said he doesn't think it's "anywhere close to peak."
"I think we're at the beginning, I think we're seeing now the potential of entrepreneurs. And when you look at it from a macroeconomic perspective, the growth rate of entrepreneurial businesses is eclipsing the growth rate of big box," he said. "And that shows you that we as consumers want to shop local, 50% of consumers want to shop at a local store. We want to shop from brands that have a good story."