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The Shopify logo is seen outside its headquarters in Ottawa, Ontario, Canada, September 28, 2018.
Chris Watty | Reuters
Shopify On Thursday, the two companies announced the sale of its logistics unit to supply chain technology company Flexport.
The sale is a reversal for Shopify, which has spent years building its logistics and order fulfillment operations. The unit includes last-mile delivery startup Deliverr, which Shopify bought last May for $2.1 billion, its largest acquisition ever.
As part of the agreement, Shopify will receive shares representing approximately 13% equity in Flexport, “bringing us to high teens ownership,” the company said in a statement.
Shopify and Flexport are deepening their alliance as Shopify looks to compete with e-commerce competitors such as Amazon And Walmart. The companies announced a partnership in February that gives Shopify access to Flexport’s shipping services, including booking international shipments from suppliers to their warehouses. Flexport also considers Shopify an investor.
Shopify President Harley Finkelstein said in an interview that after going on a “side endeavor” to grow the company’s fulfillment and logistics business, it became clear it could offer those services more effectively by integrating with Flexport.
“This allows Flexport to do what they do best, and allows Shopify to get back to doing what we do best, which is building incredible software for e-commerce,” said Finkelstein.
Flexport, which topped last year’s CNBC Disruptor 50 list, has become one of the most valuable startups in the logistics space after raising nearly $2.3 billion to date. Flexport’s sea, air, truck and rail freight forwarding and brokerage services have become important tools as supply chain bottlenecks wracked the global economy last year.
Flexport rounds up a list of former Amazon executives, including hiring its CEO Dave Clark from the e-retailer last June, where he spent nearly two decades building Amazon’s transportation and logistics unit.
Clark said in an interview that the acquisition will allow Flexport to expand the range of shipping capabilities it can offer Shopify merchants and other online businesses.
“The big difference between what we’re going to offer, and Amazon or maybe Wal-Mart logistics or some other places, is that this isn’t just for one system or store or platform,” Clark said. “We have pretty much the same vision that Shopify does. We’re just about merchant success and our customers, and we don’t care if they sell in their stores or on Amazon or on Walmart.”
Flexport will be Shopify’s official logistics provider, and a preferred partner for the “Shop Promise,” a badge displayed on Shopify merchants’ listings that guarantees next-day and next-day delivery, similar to the Amazon Prime delivery promise.
Shopify will also maintain the Shopify Fulfillment Network where merchants manage their logistics operations.
The company is scheduled to report first-quarter earnings before Thursday.
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