Store closures are getting faster and faster! Only 34% of Shopify merchants can survive for a year

According to an analysis by The Globe and Mail, over the past three years, Shopify's stores have closed or run away at an increasingly faster rate each year, with an average of only 34% of stores surviving a full year , suggesting the company is facing a growing problem with user retention.

Ottawa-based Shopify is committed to providing users with tools to build websites and operate stores, and has quickly become a leader in this field. The simplicity of building a website on Shopify has attracted a large number of new users to sign up in a short period of time, but analysts point out that this masks the long-term survival rate of the company's users.

Shopify has been criticized for years for its exaggerated customer churn rates, but it has never publicly disclosed the survival rate of stores on its platform.

During the pandemic, Shopify's number of stores has increased significantly. As the lockdown policy has caused many traditional small businesses to turn to online sales, it has boosted Shopify's new user registrations. But new data shows that most of these stores have not been able to stick to it.

The Boston Globe analyzed data from more than 5 million Shopify merchants and observed how long they used the platform. The results showed that stores opened in 2021 lasted an average of only 143 days , down from 220 days in 2019, which means that during this period, stores are closing or leaving at an increasingly faster rate. However, the data shows that merchants using the Shopify Plus package - typically large businesses - have a much higher survival rate.

These data prove that the e-commerce boom that broke out in the first two years of the epidemic cannot be sustained. Hundreds of thousands of people who want to be entrepreneurs have found that it is easy to open an online store, but it is much more difficult to stick to it and make money.

The data also showed that Shopify's customer retention rate was far lower than its competitors, raising questions about how it can maintain its dominance.

RMW Commerce Consulting, an e-commerce consulting firm in New York, said, "What Shopify has done is both good and bad. Because although it has reduced the cost of starting a business, it does not mean that the quality of merchants is increasing."

According to Shopify's financial report, Shopify's revenue jumped 86% from $1.6 billion in 2019 to $2.9 billion in 2020, and further increased 57% to $4.6 billion in 2021. But so far in 2022, growth has slowed significantly.

Shopify said the Boston Globe’s data deviated from the company’s internal data, but declined to specify why or provide the data.

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User Retention