Lutke, a German programmer living in Canada at the time, decided to write his own e-commerce software for his online snowboard shop. Not long after his website launched, online merchants repeatedly reached out to him impressed with the software he had built, asking to license it so they could run the software for own stores.

This problem gave birth to the now $42 billion-dollar company, Shopify. To say it is a rapidly-growing success is an understatement. Just when investors think Shopify has reached its peak market price, it surprises us all with continued growth. The company is one of our top performers at MyWallSt and we are watching Shopify's growing e-commerce empire closely.

Shopify provides a cloud-based ecommerce platform for small and medium sized businesses. Entrepreneurs with no prior programming experience can build an ecommerce website with pre-made website templates. Shopify's clients range from solopreneurs selling basic consumer products of all kinds to enterprise businesses with millions of dollars in sales per month. Here are some of Shopify's recent successes and why it is winning at the game of ecommerce. 

Shopify's Track Record of Positive Surprises & Growth 

Had you invested in Shopify on its initial public offering (IPO) in May 2015, your investment would have grown from $28 per share to approximately $390 per share (at the time of writing). That's growth of 1,293%, or about 93% compound annual growth since its IPO date.

If you compare Shopify to the growth of the S&P 500 index during the same time frame, you would have achieved growth of about 38.81%, or about 8.54% compound annual growth. What you thought was a growth number achieved only in the big leagues (8.54% annual growth) now appears that you were playing with the minors this whole time!

The Fundamentals of Shopify's Rapid Growth 

Perhaps you were a late investor in Shopify and decided to join the momentum in January of this year. To date, your investment would be up more than 150% since the start of the year. Sound like a surprising story? That's because it is, and companies growing at such a miraculous rate like Shopify are few and far between. Furthermore, Shopify has surprised us all from its world class growth statistics:

Total revenue growth:

89.7% from 2015-2016, 83.7% from 2016-2017, and 59.4% from 2017-2018 ,with a yearly average revenue growth of 77.6% from 2015-2018. 

Total cash:

Currently, Shopify has $2.01 billion in cash, more than doubling year over year since  its IPO. This equates to $17.89 per share. 

Total Debt:

$114.52 million in debt, compared to $2.01 billion in cash and a $42 billion-dollar market valuation. 

With revenues continuing to grow, massive cash in the bank and very little debt, Shopify appears to be a healthy investment, even despite its massive growth rates. 

What's Driving the Continued Growth of Shopify? 

Looking at the fundamental numbers is one thing, but once you understand the point of view of an online entrepreneur, it paints a bright picture that more than makes sense. What is it about Shopify that is driving such massive growth and market domination? The short answer is that its product is simply better. The long answer merit's an explanation from the vantage point of the customer. 

The ecommerce industry has an 80% business failure rate, with some reports claiming a failure rate as high as 97%. Part of this is due to the lack of experience, some is due to having poor products, and others may be due to customer service problems. Suffice it to say that building a successful ecommerce store is a difficult task to complete. That's where Shopify comes in and saves the day. 

The ecommerce platform that makes building a successful online business as easy and user friendly as possible will ultimately come out on top as the industry leader. Consequently, it will have created a major consumer monopoly, set the industry standard, and be known as the "go to" brand for all future online entrepreneurs seeking to build an ecommerce store. 

With such a high failure rate, naturally the ecommerce industry has high customer churn for e-commerce platforms. So, what's driving Shopify's continued growth? The customers that choose to use Shopify as their platform of choice just might improve its chances of success. These successful websites become lifetime Shopify customers, and the unsuccessful websites later become repeat business. Here's why... 

The Shopify App Store & Website Integrations 

A large part of the success between Shopify and the competition has to do with the available apps and integrations. Shopify has over 2,500 available apps to automate your website workflows and lighten the workload. When web app developers want to build an app that makes money, they build it for the Shopify platform because that's where the market is at.

Customers Know That Choosing Shopify Is A Long-Term Decision 

The fact is, upon starting an online business, chances are that potential Shopify customers test out multiple platforms before choosing what they like best. Why? Building an ecommerce website means making a long-term decision because switching platforms after you're in business can be costly and tedious to say the least. More often than not the online entrepreneur chooses to stick with Shopify. 

To give you an idea of what is needed to get the website started with the basics, an online business owner needs to: 

- Buy a domain name and have it hosted with Shopify. 

- Submit documentation for ID verification and for connecting your bank accounts. 

- Choose a payment gateway and connect it to your store to begin processing payments.

- Upload product photos, product descriptions, and set product pricing rules within your Shopify admin login. 

- Begin marketing campaigns to attract website visitors. 

Is this boring you yet?

Do you catch my drift? Shopify certainly knows this and that's why it invested millions of dollars and thousands of hours into making it the top product in the industry. You could say it has created a true industry moat that will be difficult for the competition to overcome. 

My Personal Experience Using Shopify 

I'll be the first to admit I fell into the category of Shopify customers that contributed to its customer churn. Not because I didn't like the product, but, bluntly put, my website didn't attract enough business to stay in business (thus is the life of an entrepreneur, but hey, it only takes one big success, right?!). The reality is if I ever decide to take a chance at the ecommerce game again, no question my product of choice will be Shopify. 

Check out Sticky Business: How Companies Keep Their Customers.

I tested out multiple other platforms that offered similar products at reasonable prices. Most platforms offer a free trial period, so you can compare to the competition. Hands down Shopify provided the most user-friendly product, the most options for internal apps and integrations, all at a price that I could afford scale as my business grew. 

It is said that being an entrepreneur is like jumping out of an airplane while having to build your parachute on the way down. The cherry on top was the fact that Shopify had already completed the majority of the "grunt" work for me, so my parachute was already halfway built when I took the jump to build an ecommerce store. This alone paints a picture as to why successful ecommerce stores stay with Shopify, and why the unsuccessful website owners won't hesitate to come back to Shopify when it makes that big leap again.

This article was written by MyWallSt contributor Cameron Williams. Cameron Williams is a freelance writer on finance and investment related topics. Read more of Cameron Williams work here.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Shopify. Read our full disclosure policy here.