The month ecommerce changed shape

Every ecommerce business I know is having the best stretch of its life, and almost none of it is because anyone got better at anything.

Physical retail closed. Demand went somewhere. It went online, all at once, in a matter of weeks. Merchants who'd been grinding for years suddenly had numbers that made no sense, and every tool sitting on top of those merchants — us included — got pulled up with them.

I want to write down what I think is actually happening, mostly so I can check it against reality later, because right now everyone is drawing a straight line through a discontinuity and calling it a trend.

What I think is real#

The customer base got permanently wider. People who had never bought certain categories online now have. Groceries, furniture, things everyone was confident required touching first. Some fraction of those people are not going back, and that's a genuine expansion rather than a pull-forward.

Merchants got forced up the sophistication curve. Businesses that were treating their online store as a secondary channel are now operating it as the whole business. They've had to learn things they'd been deferring for years. That knowledge doesn't unlearn itself when stores reopen.

Shopify's position got stronger in a way that compounds. More merchants, more volume per merchant, more of the economy running through it. That's structurally good for everyone building in the ecosystem and it doesn't reverse.

What I think is borrowed#

Our growth rate. LiveRecover is doing well right now and it would be doing well if we'd shipped nothing this quarter. Recovery volume is a function of cart volume, and cart volume went vertical for reasons unrelated to us. Every metric I have is contaminated.

Conversion rates that flatter everyone. Demand this motivated converts on almost anything. Every merchant currently believes their site is working. Some of them are about to find out what their site does when the customer has other options again.

The idea that acquisition is easy. Ad costs fell as brands panicked and pulled spend. That's not a new equilibrium, it's a temporary auction with fewer bidders, and it will unwind.

The dangerous part#

The specific risk isn't the shock. It's what a company decides during one.

If you read this quarter as evidence that your product is working, you'll hire against it, plan against it, and possibly raise against it. Then the baseline normalizes and you've built a cost structure for a demand level that was on loan.

I've been through a version of this before at a much smaller scale — a channel gets mispriced, everything works, and you mistake the window for your own competence. The correction is never a gentle glide back.

So the operating question I keep asking: what would this business look like if cart volume returned to January levels tomorrow? If the answer is fine, proceed. If the answer requires the current numbers to persist, then we're not growing, we're leveraged.

What I'm actually doing#

Not much differently, which is deliberate. We haven't hired against this quarter. We haven't changed the plan. I'm treating the revenue as real money and the growth rate as a temporary reading.

The one thing I am doing is paying close attention to the merchants who are getting good at this. There's a cohort right now going from amateur to serious very fast, and they're going to be the good customers for the next decade. Being useful to them during the year they learn is worth more than anything I could do with the traffic itself.

I'll find out in eighteen months how much of this I got right. My guess is that the customer expansion is real, the sophistication shift is real, and every growth rate anyone is quoting right now — mine included — is going to look like a spike in a chart.