Shopify (SHOP) (TSE:SHOP) has inked a strategic partnership with Alphabet’s (GOOGL) YouTube. According to the company’s press release, the partnership will allow merchants to integrate their online stores on YouTube to sell items and reach over two billion monthly users.
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Shopify stock jumped 5.6% as investors reacted positively to the strategic partnership.
Shopify’s Other Efforts to Counter Post-Pandemic Slowdown
According to Reuters, teaming up with YouTube comes barely a month after Shopify launched a new set of features that let merchants conduct business with others on Twitter (TWTR). It has also partnered with TikTok and Meta Platforms’ (META) Facebook and Instagram. The integrations were the catalyst behind orders on Shopify quadrupling in the first quarter.
Shopify is under pressure to counter the post-pandemic slowdown in online shopping. According to Reuters, it has lost its spot as the most valuable company in Canada. It has also shed more than three-quarters of its value on slowing online sales as consumers return to stores.
Shopify and YouTube: Live-Shopping Features
The strategic partnership with YouTube will allow Shopify merchants to easily feature their products across various channels on the platform, which is crucial to increasing sales. In addition, Shopify merchants will be able to sell their products in three ways via live streams, videos, and store labs. Furthermore, merchants and creators will be able to connect with consumers in a powerful way.
Eligible creators who integrate their stores stand to leverage Shopify’s inventory syncing tool to ensure no product ever runs out of stock. In the press release, YouTube confirmed that viewers on the platform can complete purchases without leaving the video platform.
According to CNBC, the whole transaction will occur as one is watching a video on YouTube. Consequently, it should help YouTube regain viewers who would otherwise have to leave the site to complete the transaction. As early as next week, YouTube viewers in the U.S., Brazil, and India will start seeing products they can buy. There are plans to add support for the service in other countries later in the year.
Wall Street is Bullish on Shopify
The Street is optimistic about the stock, with a Moderate Buy consensus rating, based on 13 Buys 14 Holds, and two Sells. The average Shopify price target of $70.30 implies 104.54% upside potential from current levels.
Bloggers’ Opinion
TipRanks data shows that financial bloggers’ opinions are 82% Bullish on SHOP, compared to a sector average of 65%.
Key Takeaway for Investors
Shopify has responded adequately to a slowdown in sales on its platform. A deal with YouTube and other social networking platforms is a strategic marketing plan that should help merchants and creators reach a much bigger target market.
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