Shopify Sells Logistics Arm to Flexport

Shopify, the Canadian e-commerce platform that aspired to compete with Amazon, has sold Deliverr and 6 River Systems, effectively ending its effort to run its own logistics network.

Instead, it’s Flexport who is stepping into the ring with Amazon by purchasing Shopify’s fulfillment operations, including fulfillment and inventory management startup Deliverr, which Shopify bought last year for $2.1B.

Shopify is selling 6 River Systems’ warehouse robotics operation to UK-based automated grocery-fulfillment specialist Orcado Group, according to a report in the Wall Street Journal. The struggling Toronto based e-retailer also announced it will lay off 20% of its workforce.

“We are changing the shape of Shopify significantly today to pay unshared attention to our mission,” Shopify CEO Tobi Lutke wrote in a letter to employees on Thursday, WSJ reported.

Flexport is buying the portfolio in exchange for stock representing about 13% equity in Flexport. It didn’t disclose the value of that stake. The deal brings Shopify’s total interest in Flexport up to the high teens, the companies said.

The acquisition includes 50 warehouses and package-sorting centers nationwide.

Flexport CEO Dave Clark told WSJ the deal to acquire Shopify’s logistics operation enables the San Francisco-based freight forwarder to offer logistics services and tracking for merchants from Chinese factories through to last-mile delivery to customers’ doorsteps. Earlier this year, Shopify and Flexport announced they were creating an app for shippers to book ocean freight and track shipments.

Clark, who came to Flexport after a 23-year career at Amazon building its huge logistics network, told WSJ the Deliverr acquisition felt like “going back in time to the early days of Amazon.”

“When I started at Amazon in 1999, we had just opened our fourth or fifth warehouse. So Flexport is going to start with its 50 really small ones and three big ones here in another month or two, and it sort of feels like we’re starting the journey again, just in a different way,” he

Shopify, built as an e-commerce sales-technology platform, had aggressively pursued an acquisition strategy designed to add its own logistics and fulfillment operation to the platform.

In 2019, the Ottawa-based company acquired 6 River Systems for $450M.

When it acquired the Deliverr in May, the company said it intended to create an end-to-end logistics network that combined Shopify’s self-operated warehouse hubs with Deliverr’s third-party distribution partners.

Deliverr, based in San Francisco, ships more than 1 million orders per month in the US. The firm’s AI-oriented inventory management software and network of third-party warehouses, carriers and last-mile partners.