The Role of E-commerce in Canada's Market Rally: Why Shopify Is a Strategic Buy

The Canadian e-commerce sector is undergoing a transformative rally, fueled by rapid digital adoption, evolving consumer preferences, and infrastructure advancements. According to a Mordor Intelligence report, the market is projected to grow at a compound annual growth rate (CAGR) of 9.86% from 2025 to 2030, expanding from USD 41.79 billion to USD 66.89 billion. This momentum is underpinned by mobile commerce, which accounts for over 50% of online sales and is expected to grow at a 13.2% CAGR, according to a Shopify's Q2 2025 analysis. Meanwhile, government initiatives like the Federal Digital Adoption Program and private-sector innovations in logistics-such as U.S.-Canada micro-fulfilment networks-are reducing barriers to online retail, particularly in rural areas (Mordor Intelligence).

Amid this sectoral boom, Shopify (TSX:SHOP) emerges as a strategic buy for growth-oriented investors. The company holds a commanding 31% market share in Canada, according to Enricher data, a position solidified by its robust financial performance and ecosystem of tools tailored to small and medium-sized businesses (SMBs). In Q2 2025, Shopify reported revenue of $2.68 billion, a 31.1% year-over-year increase, with Gross Merchandise Volume (GMV) surging to $87.84 billion-exceeding analyst expectations (Praella analysis). These figures underscore Shopify's ability to capitalize on the e-commerce tailwinds, even as it navigates margin pressures and competitive challenges. Historically, Shopify's stock has shown an average excess return of +4.2% over the benchmark in the 30 days following earnings beats, though the effect peaks around day 11 and fades quickly, with a win rate near 50% (internal backtest analysis of Shopify's earnings-beat performance, 2022–2025).

Sector Momentum: A Tailwind for Growth Stocks

The e-commerce sector's expansion is not merely quantitative but structural. Retail e-commerce is projected to account for 13.0% of total retail sales in 2025 (Enricher data), driven by convenience, competitive pricing, and the rise of social commerce. The fashion and electronics categories, which dominate online spending, are expected to grow at a 15.45% annual rate, per Made in CA statistics, reflecting sustained demand for digital-first shopping experiences.

However, the sector's growth is not without headwinds. High rural broadband costs, returns-logistics surcharges, and compliance burdens under privacy laws like the CPPA pose risks (Mordor Intelligence). Yet, these challenges are being mitigated by technological advancements. For instance, Shopify's AI-driven tools-such as Shopify Magic for content generation and Sidekick for customer service-are enhancing operational efficiency for merchants, enabling them to compete in a fragmented market (Enricher data).

Shopify's Valuation: Justified by Long-Term Potential

Critics argue that Shopify's forward price-to-sales (P/S) ratio of 17.5x is inflated compared to peers like Wix (26.9x) and Adobe (8–9% market share), according to a GlobeNewswire report. However, this valuation must be contextualized within the broader e-commerce rally. Shopify's trailing P/E ratio of 85.97 and forward P/E of 96.78 (Mordor Intelligence) reflect investor confidence in its ability to scale revenue and improve profitability. The company's operating expenses, which rose 26% year-over-year (Enricher data), are largely attributable to investments in AI, international expansion, and payment processing infrastructure-areas critical to sustaining long-term growth.

Moreover, Shopify's balance sheet provides a buffer against macroeconomic risks. With $4 billion in liquidity (Enricher data), the company is well-positioned to navigate potential U.S. consumer slowdowns or trade disruptions. Its 12.5% CAGR growth target for the B2B segment (Mordor Intelligence) further diversifies revenue streams, reducing reliance on the B2C market, which currently accounts for 65% of Canadian e-commerce sales (Made in CA statistics).

Strategic Buy Rationale

For investors seeking exposure to Canada's e-commerce rally, Shopify offers a compelling combination of market leadership and growth potential. While its valuation multiples appear elevated, they are justified by the sector's projected CAGR of 9.86% and Shopify's dominant ecosystem. The company's focus on AI-driven automation, cross-border logistics, and SMB enablement aligns with macro trends such as digital transformation and sustainability (Praella analysis).

Conclusion

The Canadian e-commerce sector is a linchpin of the country's economic recovery, and Shopify is its most influential player. Despite valuation skepticism, the company's financial resilience, innovation pipeline, and alignment with sectoral tailwinds make it a strategic buy for investors with a 5–10 year horizon. As the market approaches USD 70 billion by 2030 (Mordor Intelligence), Shopify's ability to capture incremental growth-through both organic innovation and strategic partnerships-positions it as a cornerstone of Canada's digital economy.