Warehousing technology appears to be an essential for aspiring e-retailers.
The latest to move into the sector is Shopify, the Canadian e-retail platform. It has just paid $450m for 6 River Systems, a robotics company that it describes as “a leading provider of collaborative warehouse fulfilment solutions”. The price paid is a mix of cash and paper. Shopify describes the purchase as a “a critical step to accelerate its growth”.
6 River Systems was founded by two robotics engineers who previously worked for Kiva, the robotics company purchased by Amazon. Their products are generally pitched as ‘bolt-on’ capabilities within existing warehouse operations, notably ‘robots’ which can pick from conventional racking and WMS. Under Shopify’s ownership, 6 River Systems will continue to sell its products to the market, as Shopify comments that it “will add a team with decades of experience in fulfilment software and robotics, including experienced leaders from Kiva Systems”.
However, the expansion of Shopify’s automation capabilities would appear to be linked to its own ambitions to build a geographically extensive fulfilment network. The company has so far been focussed on what might be called ‘back-office’ capabilities, including payments as well as web-presence. Its customers rely on third party providers for logistics although the company has a long-standing relationship with Amazon and some of its customers use Amazon’s fulfilment capabilities. Yet recent policy announcements suggest that Shopify may be moving to creating its own physical logistics capability. This would logical for a company that may become the second largest e-retailer in the US, behind Amazon but possibly larger than eBay. Increasing its warehouse design resources would facilitate the fulfilment move although it is unclear what the exact approach would be.
If Shopify is entering the market for fulfilment it could add further pressure to existing logistics service providers in the market. Although Shopify is unlikely to emulate the approach Amazon has taken in building air cargo capabilities, the company could rapidly build up considerable purchasing leverage in the freight market if it chooses to.
Source: Transport Intelligence, September 10, 2019
Author: Thomas Cullen
