Shopify is reportedly eyeing the purchase of e-commerce fulfillment company Deliverr in a move that would make good on the company’s plans to boost its Shopify Fulfillment Network (SFN).
A deal would value Deliverr in excess of $2 billion, according to a report from Bloomberg Wednesday citing sources familiar with the deal.
Spokespeople for Shopify and Deliverr did not respond to requests for comment on the report.
Deliverr positions itself as a direct competitor to Amazon Prime’s two-day delivery service, working with sellers on Amazon, Walmart, eBay, Wish and Shopify to offer fulfillment and delivery.
The company uses predictive analytics to determine where to have inventory stocked within its warehouse network to ensure the fastest delivery speed. It counts more than 80 fulfillment facilities within its network.
In November Deliverr closed on a $250 million Series E that brought its valuation to $2 billion. The company said at the time the capital would be used to expand its next-day fulfillment services and that half the country lived within 100 miles of one of its facilities.
The purchase would be in line with Shopify’s fulfillment strategy as it takes the learnings it’s found since launching SFN in mid-2019.
President Harley Finkelstein talked about the goal of “simplifying fulfillment” via SFN in February during the company’s fourth-quarter earnings call.
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He described SFN as moving from the “prototype phase” to the “build phase.”
“We are consolidating our network to larger facilities. We’ll operate more of them ourselves, and we’ll unify the warehouse management software that we’ve been building and testing over the past 18 months,” he told analysts. “We expect that these changes will enable us to deliver packages in two days or less to more than 90 percent of the U.S. population, while minimizing the inventory investment for SFN merchants.”
The update on SFN during the earnings call followed a report from Business Insider in late January that the company was ending some of its third-party logistics contracts, thereby reducing capacity. Shopify clarified in a statement to Sourcing Journal at the time of the report that fulfillment capacity would not be reduced and the moves were in alignment with the company’s efforts around affordable two-day shipping.
Moving to larger fulfillment centers the company operates itself will help to control quality and cost, Finkelstein said.
“Now we run larger hubs as a backbone, but we’re also taking advantage of partners. It’s not as if this [network] will be entirely Shopify-owned, but we want to match Shopify warehouses with partner warehouses, and we expect that quality will increase and the capacity will increase because of this change,” Finkelstein said.
The purchase of Deliverr, if struck, would add to a raft of buys Shopify’s made, totaling more than a dozen companies brought into its fold through acquisitions. The company’s most recent was earlier this month when it bought affiliate program software maker Dovetale.
Last year Shopify acquired augmented reality company Primer in June. Meanwhile, 2019 saw Shopify scoop up fulfillment technology company 6 River Systems, wholesale e-commerce platform Handshake and artificial intelligence enterprise products maker Helpful.
Shopify is expected to report its first-quarter results May 5.
Roth Capital on Thursday cut its price target on the company from $850 to $625 ahead of the earnings release.
Shopify shares closed down 8.3 percent on Thursday to $481.25 for a market cap of $60.3 billion.