Spotify had an attach rate of 2.99% in 2023 and 2.84% in 2022.
Attach Rate is defined as total revenue divided by GMV and is a key performance indicator of Shopify’s business and its ability to generate more excellent value for its merchants.
Indeed, the attach rate shows Shopify’s growing ability to generate revenue on top of the gross merchandise volume sold on the platform.
As it shows the ratio or percentage of additional products or services sold alongside a primary product.
It provides valuable insights into customer behavior, product bundling strategies, and overall sales effectiveness.
The founder and CEO of Shopify, Tobias Lütke, owned or controlled 7,891,852 Class B multiple voting shares and 5,250 Class A subordinate voting shares, representing approximately 33.8% of the aggregate voting power attached to all of the Company’s outstanding voting shares. Another key stakeholder is John H. Phillips, an angel investor who placed an early bet on Shopify.
Shopify is an e-commerce platform that enabled over 2 million merchants by 2021 to commercialize their products. While Shopify works with a subscription-based businessmodel, it makes most of its money via merchant services, which are additional services provided to merchants. In 2023, the company generated over $7 billion in revenue, of which over $1.8 billion (26% of total revenue) was from subscriptions and $5.2 billion (74% of total revenue) from merchant solutions.
While Merchant services drive most of the revenue for Shopify, in reality, subscriptions have a much larger contribution margin. Indeed, in 2023, on $7 billion in revenue, Shopify generated $3.15 billion in gross profits or about 50% gross margins. However, if we drill down its coststructure, we can see how gross margins from merchant services stood at nearly 39%. Meanwhile, gross margins from subscription services (Shopify’s MRR was $149 million in 2023) reported over 80% gross margins, thus making its subscriptionbusiness critical to sustaining the overall Shopify businessmodel.
Shopify was finally profitable in 2023, with $132 million in net profits, while it was not profitable in 2022, generating over $3.4 billion in net losses. In 2021, driven by the massive wave of e-commerce throughout the COVID-19 pandemic, Shopify had turned to profitability in 2021, generating over $2.9 billion in net income, while it became unprofitable again in 2022 and back to profitability in 2023.
The company generated $7.06 billion in revenue in 2023, of which $1.84 billion was from subscriptionrevenue and $5.22B in merchant revenue. In 2022, Shopify generated $5.6 billion in revenue, of which $1.5 billion (almost 27% of total revenue) was from subscriptions and $4.1 billion (more than 73%) from merchant solutions.
In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
