Wix and Squarespace Are Expanding Into E-Commerce but Shopify Isn’t Worried

Both Wix.com (NASDAQ:WIX) and Squarespace (NYSE:SQSP) have thrived for years by offering consumers website-building software. Wix's is designed to be very easy to use, whereas Squarespace focuses more on making the websites visually appealing. However, Wix and Squarespace are relying on e-commerce sites more and more for growth. And that might appear to put them at odds with the 800 pound gorilla in the space: Shopify (NYSE:SHOP).

In this video clip from Motley Fool Backstage Pass, recorded on Oct. 8, Fool contributor Jason Hall points out to Millionacres editor Deidre Woollard that Shopify has built-in integrations with both Wix and Squarespace, indicating that Shopify isn't worried at all with these players moving in on its turf.

Deidre Woollard: I want to talk a little bit about Squarespace and how they view that branding thing because they definitely think about it the same way.

With Squarespace, it's almost that plus because, for them, one of the core founding idea around Squarespace was that the options out there weren't aesthetically pleasing enough and weren't as design-focused enough. This is one of those created in the base stories, but their CEO, Anthony Casalena, created Squarespace because he thought there wasn't anything that spoke to him out there. He wanted to build something better and that's where all of that came from.

Squarespace is much smaller compared to Wix. It's newly public, so we don't have a ton of information on it but we do have more. I was thinking about this and I was thinking that if Wix is like an Amazon or Walmart, that Squarespace is your Etsy. It's artisan, it's crafty, and it's smaller. You've got right now 3.7 million subscriptions. Revenue last year was $621 million so it's smaller, but I believe it also has a lot of potential for growth, especially on the commerce side.

I think when you talk about both Wix and Squarespace, the subscription for the website right now is the bulk of both of their businesses, but the future of both of them is probably going to be the e-commerce section. The thing that I find fascinating about both is that it's not just what we used to think about with traditional e-commerce, which is there's a thing and a picture and you click the thing, you buy it and it gets sent to you. Now, it's restaurant reservations. It's paid newsletters, it's yoga classes, it's all of these different things. One of the terms that Anthony used in one of his talks was “multi-modal.”

We hear a lot about omnichannel, everything has got to be omnichannel, but with Squarespace and with their website, they are finding what they need to do is be multi-modal, which means that they have to offer multiple things. If you have a restaurant, you want to book reservations. Maybe there's also a takeout service, maybe there's also a cookbook for sale. You have to have not just traditional one-note commerce, but all of these different layers of commerce. That's something that both Wix and Squarespace are iterating on, both through development in-house, as well as through strategic acquisitions.

Jason Hall: I think one thing too, it's easy, I just think this is worth saying for both of these companies. You might hear this: e-commerce websites. Shopify. It just seems like that that's the obvious killer here.

Here's the thing. Add e-commerce to Wix in minutes, this is a Shopify page, this is around Shopify.

Add e-commerce to Squarespace in minutes.

There you go, right?

Woollard: Yeah.

Hall: Wix and Squarespace, they're fighting for a lot of the same customers here. Not necessarily the case with a company like Shopify. I just thought that was important.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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