Professional services giant Ernst & Young is banding together with Ottawa-based Shopify in an alliance the partners say will drive more enterprise-level customers to the e-commerce software giant’s platform while helping EY’s retail clients get the most out of their online sales operations.
Under the agreement announced Monday, up to 10,000 EY consultants will be trained on the inner workings of the Shopify platform.
They will work with Shopify to help make its back-end systems friendlier for large-scale businesses by tapping into their expertise in areas such as inventory management and resource planning, EY’s Ottawa-based managing partner Warren Tomlin said.
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The professional services powerhouse will also help ensure that Shopify’s largest merchants are adhering to a raft of regulations in areas such as tax and trade that vary widely from country to country.
In a statement on Monday, EY said it aims to “help Shopify’s large merchants remain compliant when selling regulated products – regardless of geography. This will allow merchants to be updated on rapidly evolving regulations, operate and sell products in a compliant manner with reduced risk, and drive a tax-efficient distribution model, creating a leading-class digital experience for customers.”
Tomlin wouldn’t get into specifics about the terms of the arrangement, saying only that both companies are “investing independently” in the partnership.
‘Secure options’ for merchants
He noted that as retailers in heavily regulated industries such as gaming, pharmaceuticals, alcohol and cannabis put more of their sales and marketing resources into e-commerce, it’s more important than ever for platforms like Shopify to have “secure options” for those merchants.
“Shopify brings the (e-commerce) platform … and we bring the teams to manage the other questions,” Tomlin told Techopia on Monday.
“We both see the value of each other. We think we’re going to be unlocking a major new category around regulated (industries) and unlocking a lot of value for our combined clients – some of which will be the most prestigious brands in the world.”
“The days of one independent, narrow solution being required by our clients are long gone. Our clients are more complex, and their expectations of providers like EY are equally as complex and demanding.”
Warren Tomlin – managing partner at EY’s Ottawa office
EY said the firms will also gather with customers at its global network of innovation hubs in locales like New York, London, Toronto, Sydney and Singapore to brainstorm better ways of selling products online in an effort to “reimagine the future of e-commerce and unlock new markets for regulated products.”
Tomlin, who helped negotiate the agreement, said it will give EY a leg up on other providers in the highly competitive professional services space in which a growing number of clients expect more than just tax, audit and accounting advice.
“The days of one independent, narrow solution being required by our clients are long gone,” Tomlin explained. “Our clients are more complex, and their expectations of providers like EY are equally as complex and demanding.”
Meanwhile, Shopify hopes that rubbing shoulders with EY will prompt more big-name retailers to subscribe to its software as the Ottawa firm looks to bounce back from a rough 12-month stretch that’s seen its stock shed nearly 80 per cent of its value since last November.
“Modern enterprises operate in a complex environment where scale, speed and flexibility are needed to drive growth,” Shopify president Harley Finkelstein said in a statement. “We are excited to work with EY teams to bring the performance, customization and commerce expertise that our merchants know and love to more large enterprises around the world.”
Shares up slightly
Shopify shares were up 27 cents to $43.60 in late-afternoon trading Monday on the Toronto Stock Exchange.
Tomlin agreed the new alliance should give Shopify a boost as it strives to get back to profitability amid a widespread slowdown in online shopping growth in 2022.
“They have been very, very successful at what they’ve done, and there is potential to help their clients as they achieve enterprise scale and to help other clients that are already an enterprise that could be considering Shopify,” he said.
The agreement comes a few months after Shopify laid off 10 per cent or roughly 1,000 of its workers and admitted it misjudged the growth of e-commerce.
The Ottawa-based company bet the amount of shopping people did online would leap ahead by five or 10 years from pre-pandemic predictions, but as COVID-19 measures were lifted, people instead reverted back to pre-health crisis purchasing habits.
Shopify, which keeps its books in U.S. dollars, reported a net loss of $158.4 million or 12 cents per diluted share in its most recent quarter, compared with a net profit of nearly $1.15 billion or 90 cents per diluted share a year ago.
Revenue in the quarter totalled nearly $1.37 billion, up from $1.12 billion in the same quarter last year.