Shopify teams up with Chinese online retail giant to ease access to world’s largest market

Shopify sign
Shopify sign

Amid a slide that’s seen its shares shed 40 per cent of their value since November, Shopify is partnering with a Chinese e-commerce powerhouse in a bid to make it easier for its U.S.-based merchants to sell their goods in the world’s most populous market.

The Ottawa-based software giant announced this week it’s struck a deal with JD.com that will allow merchants in the United States that run online stores using Shopify’s software to list their wares on JD’s global e-commerce platform, known as JD Worldwide.

Shopify said the new sales channel, which launched on Tuesday, opens the door to 550 million customers in China, where JD.com is jostling with Alibaba for the title of the country’s largest online retailer.

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The new platform will automatically translate product names and descriptions, convert prices into local currencies and calculate all shipping and duty expenses. Shopify said it’s working with JD.com to create a seamless process for transporting goods from the Chinese firm’s warehouses in the U.S. to customers in China.

Shopify vice-president Aaron Brown called the collaboration between the two e-commerce behemoths “a major step in solving cross-border commerce for merchants.”

‘Strategic partnership’

Daniel Tan, president of JD Worldwide, said the alliance will “unlock the huge potential of the Chinese market” for brands outside of China.

“At the same time, it will increase cross-border commerce by leveraging our global supply chain abilities, simplifying what has traditionally been a very complicated process,” he said in a statement.

Shopify said the new sales channel is part of a “larger strategic partnership” between the two companies that “aims to help solve cross-border commerce challenges across product sourcing, selling and logistics for merchants in the U.S. and China.”

The partnership with JD.com comes as Shopify’s stock has been mired in a free fall that’s knocked the software giant out of top spot in the ranking of Canada’s most valuable publicly traded companies.

The stock has been on a steady slide since mid-November after Shopify’s CFO cautioned that the “extreme levels” of online spending seen earlier in the pandemic would likely level off as more consumers reverted to in-person shopping and COVID-related restrictions eased.

After hitting a high of $2,228.73 on the Toronto Stock Exchange in late November, Shopify shares were trading at just over $1,330 as of noon on Thursday.

Kevin Headland, co-chief investment strategist at Manulife Investment Management, told the Canadian Press last week that the prospect of looming interest rate hikes is having a negative impact on technology stocks that have thrived amid low rates, and Shopify is no exception.

“If I look at the TSX, what is driving that down is really Shopify, and I think it’s just being dragged down with its peers in the U.S.,” Headland said.

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