The logistics-fulfillment businesses of Shopify, notably the American e-commerce platform Deliverr, are being acquired by Flexport, enabling the freight company to establish home delivery services that would compete with Amazon.com for retailer business.
Additionally, Shopify is selling its 6 River Systems warehouse robots division to Ocado Group, a leader in automated supermarket fulfilment in the United Kingdom.
The firms announced on Thursday that Shopify is selling its logistics division to Flexport, a provider of supply chain technologies.
Shopify, which had invested years in setting up its own logistics and order-fulfillment systems, has taken a different path as a result of the transaction. The entity consists of last-mile delivery firm Deliverr, which Shopify acquired for $2.1 billion in May of last year—the company’s largest ever acquisition.
Shopify will get stock as part of the arrangement that is equivalent to about 13% of Flexport’s equity, “bringing us to a high-teens ownership,” the business stated in a statement.
As Shopify tries to compete with e-commerce rivals like Amazon and Walmart, the two companies, Shopify and Flexport, are strengthening their partnership. Shopify merchants now have access to Flexport’s freight services, including scheduling global shipments from suppliers to their warehouses, according to the firms’ relationship, which was announced in February. Shopify is also considered as a shareholder in Flexport.
The firms announced on Thursday that Shopify is selling its logistics division to Flexport, a provider of supply chain technologies.
After embarking on a “side quest” to build the company’s own fulfilment and logistics operations, Shopify President Harley Finkelstein stated in an interview that it became evident that the company could provide those services more successfully by merging with Flexport.
Flexport will now be able to focus on what they do best, and Shopify will be able to resume developing world-class e-commerce software, according to Finkelstein.
After funding about $2.3 billion to date, Flexport, which came in first place on the CNBC Disruptor 50 list last year, has grown to become one of the most valued logistics businesses. As supply chain bottlenecks shook the world economy last year, Flexport’s ocean, air, truck, and rail-freight forwarding and brokerage services turned into indispensable instruments.
A growing number of ex-Amazon executives have joined Flexport, including its CEO Dave Clark, who was hired away from the online retailer in June after working there for nearly two decades and expanding Amazon’s transport and logistics division.
Flexport will now be able to focus on what they do best, and Shopify will be able to resume developing world-class e-commerce software, according to Finkelstein.
In an interview, Clark stated that the acquisition would enable Flexport to scale the shipping services it can provide to Shopify merchants and other online businesses.
“The main distinction between what we’ll do and what Amazon, Walmart Logistics, or other companies might provide is that this isn’t just for one system, store, or platform,” Clark stated. “Our vision and Shopify’s are very comparable. Whether they sell through their own shops, Amazon, or Walmart, we only care about the business’s success and the success of our clientele” he added.
As a preferred partner for Shopify’s “Shop Promise,” a badge that is shown on Shopify merchants’ listings and assures next- and two-day delivery, comparable to Amazon’s Prime delivery promise, Flexport will serve as the platform’s official logistics provider.
Additionally, Shopify will keep its Shopify Fulfilment Network app, which lets retailers control their supply chain.
The business is expected to release first-quarter earnings on Thursday before the bell.