Shopify’s ambitions of building out a full-service logistics business just gained traction with its largest acquisition to date of e-commerce fulfillment company Deliverr.
The deal, confirmed Thursday, is valued at about $2.1 billion and further builds on the Shopify Fulfillment Network (SFN) as the company looks to be the go-to logistics company for sellers.
Deliverr, which closed on a $250 million Series E in November, uses predictive analytics to assist with inventory planning in warehouses. The company views itself as a competitor to Amazon Prime’s two-day delivery service, with a user base that includes sellers on Shopify, Amazon, Walmart and Wish.
“Right now, merchants have to fumble through this maze of freight providers, 3PLs, middle- and last-mile carriers, just to name a few,” Shopify president Harley Finkelstein said in a call with analysts Thursday morning.
SFN takes care of the activities that occur in the supply chain after an order is placed, offering competitive delivery speeds, a simplified return logistics process and a new warehouse management system developed in-house that’s being used at a few of the company’s “key” locations, Finkelstein said. The warehouse technology will be rolled out across SFN by the second quarter, according to Shopify.
Deliverr “pairs perfectly together” with SFN, “which is already fulfilling one million orders a month,” Finkelstein said. “And, what we end up with in the end is this merchant-obsessed, end-to-end software and logistics platform.”
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Finkelstein went on to add Deliverr is “software first” and asset light, making it an attractive acquisition for Shopify.
As Shopify put it in a blog post Thursday announcing the deal, “Fast, reliable shipping is now table stakes; it’s a deciding factor for customers when shopping online, and their expectations are only growing.”
The company is touting the buildout of a full-service logistics arm as a way for smaller businesses to navigate through the current supply chain operating environment and expectations supply chains will only become more complex even after some semblance of normalization occurs, while also helping those same businesses compete with larger players in the market.
That was also made clear when Shopify struck a deal valued at $450 million for warehouse robotics and fulfillment software maker 6 River Systems in 2019.
“Our goal is to not only level the playing field for independent businesses, but tilt it in their favor—turning their size and agility into their superpower,” Shopify founder and CEO Tobi Lutke said in the blog post.
Notably, Shopify also participated in the February Series E round of digital freight forwarder Flexport, which totaled $935 million and brought the company’s valuation up to about $8 billion. The strategic investment was Shopify’s first in Flexport, the latter having a long-term goal of streamlining global trade.
Shopify’s executive team made the company’s ultimate ambitions clear on the Deliverr news with Finkelstein saying the goal with SFN is to “accelerate our path to an end-to-end merchant supply chain solution.”
Chief financial officer Amy Shapero put it another way, saying SFN is creating a “platform that manages inventory from port to porch and across all sales channels for merchants of all sizes on and off Shopify.”
The Deliverr acquisition news also came with the company’s first-quarter results, which missed the mark on consensus estimates.
The company’s revenue jumped 22 percent to $1.2 billion. Shopify swung to a net loss in the quarter of $1.5 billion, compared to net income of $1.3 billion a year ago as the company lapped a strong 2021 fueled by stimulus checks and Covid-19 lockdowns.
Shares of Shopify slipped 14.5 percent to $415.07 in afternoon trading Thursday on the results. The company had a recent market cap of $51.9 billion.