REUTERS/Joshua Roberts
Amazon has acquired Selz, an Australian e-commerce startup, in a move that could potentially put the giant online retailer in direct competition with Shopify.
Selz offers various Shopify-like services, such as the technology needed to build an e-commerce website and accept online payments. Amazon executives, including CEO Jeff Bezos, have become increasingly aware of Shopify's competitive threat in recent years, and have been in deep talks to potentially launch a competing service, as Insider previously reported.
Amazon's spokesperson confirmed the deal in an email to Insider on Monday, but did not disclose the deal's price. Selz's CEO Martin Rushe first announced the acquisition through a blog post last month, which largely went unnoticed until this week.
"We have signed an agreement to be acquired by Amazon and are looking forward to working with them as we continue to build easy-to-use tools for entrepreneurs," Rushe wrote at the time.
The acquisition points to Amazon's growing interest in the e-commerce software space, a market where it previously failed. Amazon shut down a service called Webstore in 2015 that effectively offered similar services to Selz and Shopify.
But more importantly, it signifies Amazon's ambition to jump into Shopify's territory of offering software to small business owners selling online. Amazon has grown "defensive" about Shopify's meteoric rise lately, and Bezos has been directly involved in talks to assess Shopify's growing threat as a competitor over the past year, Insider previously reported.
"It definitely confirms any rumors that Amazon is entering the [small and midsize business] e-commerce platform space," Rick Watson, CEO of RMW Commerce Consulting told Insider. "Selz — not now but long-term — could be a significant competitor to platforms like BigCommerce and Shopify."
'Acquihire'Selz, based in Sydney, Australia, is a startup with just over 30 employees, according to Pitchbook. It's raised $11 million in funding so far, Crunchbase data shows, making it a tiny competitor to Shopify, a public company worth over $170 billion.
Given its small size and lack of market-leading product, Selz isn't expected to boost Amazon's business in any meaningful way in the near term, according to Juozas Kaziukenas, CEO of research firm Marketplace Pulse. Instead, he sees the deal as an "acquihire," or an acquisition primarily aimed at hiring Selz's leadership team.
"There is value in the team and probably that's where the fit happened," Kaziukenas said.
While Amazon and Shopify are both effectively e-commerce companies, they don't directly compete against each other. Shopify sells software tools needed to build an e-commerce site, while Amazon is largely focused on selling products, either directly to consumers or through merchants on its third-party marketplace.
But the two companies have become more intertwined in recent years, as they both fight over the same online merchants, who typically sell on both Amazon and their own websites, often run by Shopify's technology. For Amazon, it's important to keep those merchants using its service over others, as they increase the number of products on its site, which in turn attract more customers.
Meanwhile, Shopify has increasingly jumped into Amazon's turf. The company launched a new service called Shopify Fulfillment Network last year, which helps store and ship products on behalf of sellers. That service is in direct competition with Fulfilment by Amazon, a key piece of Amazon's third-party marketplace that generated over $80 billion in sales last year.
And there's been plenty of speculation about Shopify launching its own marketplace for years.
Watson, the e-commerce consultant, said Selz's roots in non-US markets is particularly interesting. The fact that it was born in Australia likely gives it more awareness of international sellers, he said, unlike some of the US-centric solutions that often never go global.
"That's a strategic weakness of Shopify," Watson said.
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