At the beginning of May, Shopify announced its largest acquisition in the history of the company, a $2.1bn purchase of U.S based e-fulfilment company Deliverr. Shopify stated the acquisition will create an end-to-end logistics platform that will unlock fast and easy fulfilment for merchants.
Deliverr, which rents out warehouse space and uses warehouses’ fulfilment departments to pick and pack e-commerce orders, uses predictive analytics and machine learning to anticipate the demand for products based on geography and other variables. The platform then uses the analysis to “pre-position” items close to areas of demand, stocking items across its network of warehouses and sort centres and determining the best delivery method to ship to customers.
According to Shopify, the acquisition will combine both company’s fulfilment networks to remove supply chain complexities for “merchants of all sizes, on and off Shopify.” The company hopes that Deliverr’s technology will strengthen its fulfilment network’s ability to manage merchant inventory from port to porch. Finally, the acquisition will also power Shop promise, a new service that offers consumers two-day and next-day delivery options with the merchants of their choice.
The acquisition was largely influenced by fast changing consumer demands; Shopify reported that it is investing more in its logistics network to assist merchants in providing fast, reliable shipping for their customers. Tobi Lutke, founder and CEO of Shopify commented: “Our goal is to not only level the playing field for independent businesses but tilt it in their favour. Together with Deliverr, Shopify Fulfilment Network will give millions of growing businesses access to a simple, powerful logistics platform that will allow them to make their customers happy.”
The acquisition will continue to support Shopify’s quest in becoming a viable alternative for third-party sellers on Amazon. The company offers an appealing alternative for online retailers looking to build and maintain their own branded websites; combined with growing logistics and fulfilment capabilities, it is looking more likely that e-fulfilment providers like Shopify may be able to lure merchants away from larger online marketplaces such as Amazon.
According to parcel and LTL consultancy Shipware, the acquisition “spells out a potentially exciting opportunity for small brands to offer big brand fulfilment options [and provides] Shopify some much-needed logistics infrastructure if they’re to serve up stiffer competition to Amazon.”
Shopify’s announcement also comes amid a successful funding round for e-fulfilment start-ups – Vienna-based byrd has raised $56m in a series C funding round, with the company stating it will use the capital injection to offer next-day delivery within Europe. The growing landscape of e-fulfilment providers looking to duplicate what Amazon can offer for smaller and medium sized businesses has not gone unnoticed by the e-commerce giant; the introduction of Amazon’s Buy with Prime, which extends Prime benefits beyond Amazon.com and to merchant’s own online stores, indicates that Amazon may not have as tight a grip on the e-fulfilment market as it thinks.
Shopify, Deliverr and 6 River Systems (Acquired by Shopify in 2019 for $450m), will collectively form a broad logistics unit under Shopify’s newly appointed CEO, Aaron Brown.
Source: Transport Intelligence, May 24, 2022
Author: Nia Hudson