Amazon.com (NASDAQ:AMZN) sells tens of billions of dollars in products online every quarter, but its business isn't growing nearly as quickly as Shopify's (NYSE:SHOP).

Unlike Amazon.com, Shopify offers retailers a decentralized e-commerce solution that allows them to sell products through multiple channels, including Amazon.com, eBay, and most recently, Facebook's Instagram.

Shopify's agnostic approach to e-commerce is resonating with customers and producing envy-inspiring sales growth, so let's learn more about this e-commerce upstart.

A persons hand pushes a miniature shopping cart in front of a laptop computer.

IMAGE SOURCE: GETTY IMAGES.

The business

Rather than relying solely on one centralized e-commerce site for sales or managing multiple accounts at different e-commerce distribution channels, merchants can use Shopify's solution to build a website quickly that sells across multiple channels.

The company's software tracks inventory online and in-store, removing inventory headaches. Shopify's payment processing services and cash advances simplify sales and improve merchant cash flow, and blogging tools, integrated shipping, and robust analytics are available, too.

Shopify makes its money by charging subscription fees that run between $29 per month and $299 per month, depending on features. Enterprise customers pay more, and annual subscriptions are available at a discount. The company also collects a variable percentage of any credit card sales.

Sizzling sales

Over 500,000 businesses sell products using Shopify worldwide, and a record number of new merchants signing up for subscriptions last quarter translated into third-quarter sales of $172 million, up 72% year over year. That revenue growth handily outpaced Amazon.com's year-over-year net sales increase of 34% in the third quarter.

Shopify's growth came from both more merchants using its solution and more products being sold by its merchants. Its subscription revenue, including annual and monthly subscribers, increased by 65% to $82.4 million, and its merchant solutions sales jumped 79% to $89 million. It processed $6.4 billion in gross merchandise volume in the quarter, up 69% from Q3 2016.

Profits ahead

Shopify's gross profit increased 86% to $100 million from last year, and as a result, its unadjusted operating loss improved to 7.4% of sales from 9.5% of sales in Q3, 2016. After adjusting for one-time items such as share-based compensation, Shopify delivered an operating profit of $1.7 million -- its first operating profit as a public company.

Shopify's adjusted operating profit is encouraging because it's only scratching the surface of its addressable market. E-commerce sales totaled over $111 billion in the U.S. alone in Q2, so Shopify's gross merchandise volume represents only a fraction of worldwide e-commerce sales.

Given that U.S. e-commerce sales account for only 8.9% of the nation's $1.3 trillion in total retail sales, and e-commerce sales increased by 16.2% year over year in Q2, Shopify's runway appears to be very long. 

A person laying on a couch shopping from their smartphone.

IMAGE SOURCE: GETTY IMAGES.

Investor takeaway

Amazon.com is going to capture more in total e-commerce dollars, but Shopify is in the perfect position to deliver better-than-Amazon growth.

For example, Shopify is guiding for Q4 revenue in the range of $206 million to $208 million, up 58.7% year over year at the midpoint. For comparison, Amazon.com's expects net sales of between $56 billion and $60.5 billion, up 28% to 38% year over year.

Overall, I think Shopify's decentralized approach will continue to resonate with sellers, and that should allow it to continue growing more rapidly than Amazon.com. If I'm right, then Shopify investors could end up being handsomely rewarded.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Todd Campbell owns shares of Amazon, Facebook, and Shopify. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Amazon, eBay, Facebook, and Shopify. The Motley Fool has a disclosure policy.