How Legalization Made Shopify Inc. (TSX:SHOP) Even More Lucrative

Shopify Inc. (TSX:SHOP)(NYSE:SHOP) was a key player in the recent rollout of legalization across Canada, and now that successful rollout could prove lucrative in other areas.

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U.S. consumers are preparing for what will be a very busy shopping weekend.

The annual Black Friday shopping event is set to kick off tomorrow (or, based on the impatience of some retailers, later today) that will kick start the holiday shopping season. Last year, Americans spent a whopping US$5 billion in the 24-hour period following Thanksgiving over what they spent in 2016, and retailers are expecting much of the same frantic level of retail sales to come this year as well.

Black Friday is followed by “Cyber Monday,” another shopping extravaganza, this one targeting online shoppers. Sales from Cyber Monday also hit a record last year, hitting US$6.6 billion.

That’s a lot of toys, TVs, computers, and Christmas presents.

When retailers do well, so too does the slew of other businesses that are part of the retail process. One such business that is bound to have a very busy, if not completely lucrative weekend is Shopify Inc. (TSX:SHOP)(NYSE:SHOP).

Why I like Shopify —  and why you should too

One of the many things that I love about Shopify is how the company took an existing business model – setting up an online storefront and completely revamped it into a quick, personal, configurable, scalable and cost-effective solution that businesses worldwide can adopt.

To date, the company proudly boasts over one million active users across 600,000 businesses, which comprise an incredible $82 billion in products and services sold on the platform. The interesting part is that that figure is still a drop in the bucket in terms of long-term potential.

One such example is Shopify’s role in the recent rollout of the legal cannabis industry across Canada. Shopify has forged contracts with many of the larger companies operating in that sector and stands to profit significantly as the lucrative new sector continues to attract attention and garner sales. Specifically, sales from B.C., Newfoundland and Labrador, Ontario, and P.E.I are being processed through the platform.

More important to note, however, is what Shopify’s involvement in the legalization rollout means for other segments of the economy, where privacy concerns or strict regulatory requirements exist meet high demand and strict privacy requirements. Shopify set up servers in Canada that could, in theory, become the baseline for other government or regulatory businesses to conduct online transactions.

Shopify COO Harley Finkelstein recently alluded to that, noting that regulated industries in other countries will take notice and consider Shopify for their own implementations.

Final thoughts

Shopify came to market at a perfect time, capitalizing both on the explosion of mobile commerce as well as the necessary shift in thinking that traditional retailers have been forced to adopt. Both of these have allowed Shopify to record incredible growth, which for the foreseeable future appears set to continue.

Investors looking to diversify their portfolio with a position in a tech stock that has inroads to retail will find that Shopify represents a lucrative long-term growth opportunity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and Shopify. Shopify is a recommendation of Stock Advisor Canada.

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