In 2002 a small US merchant who wanted to sell online had to assemble the pieces: store software, a server to host it, tools to manage products and orders, and a storefront that looked like the business VO5 VO7. Each piece was a separate purchase or a separate job, and most small sellers had no one to run a server. Buying the software also left the harder problem open: a new store had no visitors, and traffic had to be earned separately, through search engines and marketing VO5.
Volusion
Volusion hosted small merchants' stores four years before Shopify and was the larger company in 2010, but its stores needed programming to restyle, it built themes, integrations and marketing services itself instead of letting outside builders earn from its merchants, and it spent the next decade on an enterprise spin-off, a rebuild and its debt.
Why Volusion lost to Shopify
- 1 · 2002–10Hosted first, harder to restyleHosted stores from 2002 and 10,000 merchants by 2008; in 2010 Bessemer found customization needed programming.Managed Service
- 2 · 2010–17Themes and integrations built in-houseIts API drew little use by 2010; in 2017 Volusion still designed its own themes and chose its own integrations.
- 3 · 2009–17Growth services sold by Volusion, not partnersIt sold merchants search and marketing services itself, so designers had less reason to recommend it than Shopify.
- 5 · 2017–26Outside payments, departing stores, Chapter 11V2 took payments through PayPal and Stripe; merchants such as ShadesDaddy moved to Shopify Plus; matured debt led to Chapter 11 in 2020.
Versus Shopify: Shopify made a store a merchant could restyle without code and let designers and app builders earn from its merchants, so each new partner brought the next merchant CX1 SH42. Volusion started earlier and larger, but kept customization, themes and merchant services in its own hands, then split its effort between an enterprise platform and a rebuild CX1 VO2 VO1.
Arena: Market Conditions Before Volusion
How each step happened
Step 1 of 5 · 2002–10
Hosted first, harder to restyle
Volusion had the head start. Kevin Sproles began it as an after-school project in the late 1990s and from 2002 ran the store for the merchant; by 2009 one monthly subscription covered hosting, design templates, order administration and search optimization VO7 VO5. By December 2008 it had more than 10,000 active merchants and was among the fastest-growing software companies on the Inc. 500 GFB-13. Merchants started with a free 14-day trial and then paid by catalog size, from $29.95 a month for 20 products to $197 for unlimited products VO5 GFB-13. In 2009 it earned $23 million CX1.
The lead rested on setup, not on what a merchant could change afterward. When Bessemer studied the market for its 2010 Shopify investment, it called Volusion "perhaps the most formidable competitor", priced like Shopify with a similar feature set, but "less drag-and-drop": customization required some programming CX1. A merchant who wanted a store that looked like its brand needed someone who could program. The next merchant, and the designer advising it, compared what each store let them do, not how long each company had existed.
Rivals Shopify ran hosted stores from June 2006, replaced its cut of sales with a monthly subscription in 2007 so that growing sellers were not penalized, and gave designers Liquid, a template language that could not run code on its servers SH11 SH25 SH46. In October 2010 it had nearly 10,000 customers and an annual run rate of about $5.5 million, against Volusion's $23 million in 2009 CX1.
Step 2 of 5 · 2010–17
Themes and integrations built in-house
Volusion opened an API, but few built on it. Bessemer found that the interfaces offered by Volusion, BigCommerce and Magento had seen limited uptake, and its customer diligence found them "extremely difficult to develop against" CX1. An outside developer had no easy way to add what Volusion lacked, and so no business to build around Volusion's merchants.
Volusion built those pieces itself. In May 2017 Sproles listed the year's work: more than 20 new themes of Volusion's own, a new design promised every month, premium themes cut to $225, a drag-and-drop Content Builder, and T3, a team of engineers devoted only to customer-reported issues VO2. The integrations he promised next, with Shippo, PayPal, Stripe, Zapier, Yotpo, Square, Xero and Amazon, were ones Volusion chose and would deliver VO2. Each new capability waited on Volusion's own engineers, and Sproles wrote that "technology limitations and a lack of SMB focus internally" had kept the product from advancing "at a pace or quality that I want to see" VO2.
Rivals Shopify opened its API and App Store to about 5,000 merchants in June 2009 and handled app billing itself; by October 2010 two thirds of its customers used at least one of 54 apps SH9 CX1. Its Theme Store opened in April 2010 with outside designers' themes from $80 SH37.
Step 3 of 5 · 2009–17
Growth services sold by Volusion, not partners
From 2009, alongside the themes and integrations it built itself, Volusion treated the merchant's next problem, finding buyers, as its own business. Sproles's 2009 advice to merchants led with brand and search optimization, and his stores were sold as search-optimized VO5. By 2017 Volusion sold marketing services itself, covering search optimization, paid search, social media and comparison shopping engines, and made coaching new merchants to a first sale an onboarding priority VO3. The help met a real need: a store with no traffic made no sales.
It also left the designers and marketing firms that advised small merchants with little to gain from Volusion. Those firms chose which platform to recommend. At similar prices and features, a firm that recommended Shopify could restyle a store in templates, add apps, and keep a share of the account's revenue; a firm that recommended Volusion met programming work and a platform that sold marketing services to the same merchants CX1 SH1. The people who brought small merchants online had more reason to send them to Shopify.
Rivals Shopify gave any design firm that brought a merchant 20 percent of that account's revenue for life, and such firms brought about 20 percent of its signups by 2010 SH1 CX1. Its partners earned about $800 million in 2017, more than Shopify's own $673 million in revenue SH42.
Step 4 of 5 · 2012–17
Split by Mozu, then reset by V2
While Shopify's partners multiplied, Volusion divided its attention. Sproles stepped back from running the company when his first child was born; four years later, he says, it "had deviated significantly from our mission to help small businesses, and it wasn't working" VO1. The deviation was Mozu, a separate platform for large companies VO1. He returned as CEO in January 2016 with an agenda that included "fix or sell Mozu", and by May 2017 Mozu had been sold to Kibo VO2 VO1. "When we sold Mozu we became profitable again, immediately," he says VO1.
The repair required a second platform change. V2, released in 2017, was built from the ground up for mobile, with plans from $15 to $135 a month; Sproles wrote that it "doesn't currently have all the functionality of the current Volusion experience" and made the move optional and free VO1 VO2. Every existing merchant now faced a second decision about where its store would live, at a time when Shopify offered more apps, themes and agencies than ever. In October 2017 Volusion reported about $50 million in annual revenue and 30,000 clients VO1.
Rivals Shopify kept its largest merchants on the same platform: Shopify Plus launched in February 2014, priced between its own plans and enterprise software SH14 SH48. At the end of 2015 Shopify had 243,468 merchants, more than 1,200 apps and more than 8,500 referring partners SH3.
Step 5 of 5 · 2017–26
Outside payments, departing stores, Chapter 11
Payments stayed outside Volusion. The payment options Sproles named as ready for V2 in 2017 were integrations with PayPal and Stripe, beside Shippo for shipping VO3. The processors earned on each sale Volusion's merchants made; Volusion earned its plans and services.
What held merchants was their data. ShadesDaddy, an eyewear retailer with years of products, variants and customer history on Volusion, wanted a more modern design and functions its platform could not provide; any move had to carry that dataset intact VO8. The agency 1Digital migrated it to Shopify Plus and built a custom app for the new store VO8. Agencies that knew Shopify made leaving Volusion a project they could sell.
In July 2020 Volusion filed for Chapter 11, citing matured debt and an unstable capital structure, and kept serving merchants; it emerged on January 19, 2021, after renegotiating with a single lender VO4 VO9. It still sells hosted stores, now in plans capped by both product count and yearly sales: Personal at $35 a month for 100 products and $50,000 in sales, up to Business at $299 for $400,000, with larger merchants priced on volume VO6. Volusion hosted small merchants four years before Shopify and was larger in 2010. Shopify won by making its stores easy for others to change and worth building for, the step Volusion's early lead from step 1 never took.
Rivals Shopify launched Shopify Payments in August 2013, set up automatically for new stores, and by 2015 charged merchants who used another processor a transaction fee SH30 SH33. In 2025, 65.6 percent of the sales on its stores went through it SH8.
Key dates
- 2002Hosted stores for small merchants
- 2006-06Shopify opens hosted stores SH11
- 2008-1210,000 active merchants Plans priced by product count, $29.95 to $197 a month GFB-13
- 2009$23 million revenue Full year, per Bessemer's 2010 memo CX1
- 2009A 14-day trial, then plans from $29
- 2009-06Shopify opens its API and App Store SH9
- 2010-04Shopify's Theme Store opens SH37
- 2010-10Bessemer finds Volusion needs programming to customize
- 2010-10Shopify: $438K monthly recurring revenue Nearly 10,000 customers CX1
- 2013-08Shopify Payments launches SH30
- 2014-02Shopify Plus keeps large merchants on Shopify SH14
- 2016-01Sproles returns as CEO to refocus on small business VO2
- 2017-05V2 announced; Mozu sale finalized
- 2017-10About $50 million revenue Annual, per the founder; 30,000 clients VO1
- 2020-07Chapter 11 over matured debt
- 2021-01Emerges from Chapter 11
- 2026-09Plans capped by yearly sales, $50,000 to $400,000 VO6
Sources
Oldest first.
- SH11 Shopify is live!. Primary source
- GFB-13 Cart of the Week: Volusion. Trade press
- VO5 Quick query: factors that create ecommerce success. Founder interview
- SH9 Shopify launches API platform and App Store. Primary source
- SH25 How Shopify Became Profitable By Helping Anyone Open An Online Boutique. Founder interview
- SH37 Shopify Theme Store launches. Primary source
- SH1 Q&A with Tobias Lütke of Shopify. Founder interview
- CX1 Shopify investment memorandum. Investor analysis
- SH30 Shopify Launches Shopify Payments. Primary source
- SH14 Shopify launches Shopify Plus. Primary source
- SH33 Shopify Q2 2015 Management Discussion and Analysis. Filing
- SH3 2015 Form 20-F. Filing
- VO2 A note from our CEO and founder. Founder letter
- VO3 Volusion founder on growing traffic for smaller merchants. Founder interview
- VO1 Volusion CEO bullish on smaller ecommerce businesses. Founder interview
- SH42 Shopify’s partner ecosystem. Trade report
- VO4 Clarification regarding Chapter 11 protection. Primary company record
- VO9 Volusion is Taking the Next Steps to Enhance Its Platforms. Primary participant record
- SH48 Book excerpt: The Shopify Story, how Shopify Plus was born. Company history
- GFB-15 Volusion Review 2025. Third-party review
- SH8 Shopify 2025 Form 10-K. Filing
- VO6 Volusion pricing. Current offer
- VO7 Volusion company history. Company retrospective
- VO8 Building a Better Store with Shopify Plus. Primary participant record
- SH46 Liquid History.md. Primary source