Shopify to sell logistics business to Flexport
- Shopify is selling its logistics business to Flexport, the companies announced Thursday.
- The deal will enable Flexport to expand into last mile and e-commerce fulfillment services, according to a news release. The logistics platform will become Shopify’s official logistics partner and the preferred provider for Shop Promise, its program offering improved delivery date visibility.
- The deal, which is expected to close in the second quarter, includes Deliverr, an e-commerce fulfillment and order storage provider that Shopify acquired last year for $2.1 billion.
Shopify sees Shop Promise as one piece of its efforts to simplify logistics for merchants across the supply chain, with initiatives further upstream helping them maximize the benefits of the program.
To help move products from manufacturers to U.S. ports, a Flexport app focused on ocean freight launched last week on Shopify’s app store. The app, part of Flexport’s strategic partnership with Shopify, allows merchants to gain SKU-level visibility for in-transit inventory and pick the most appropriate ocean freight shipping option, per a news release.
“Global logistics providers have chronically underserved small-and-medium-sized businesses,” said Parisa Sadrzadeh, Flexport Senior Vice President of SMB Product and Technology, in a statement. “We are excited to deepen our partnership with Shopify to enable SMBs with the logistics infrastructure, expertise, and technology typically reserved for enterprise companies with more experience and resources.”
Once a merchant’s products enter distribution hubs and fulfillment centers, Shopify’s acquisitions of 6 River Systems in 2019 and Deliverr in 2022 come into play. Finkelstein said last year that the combination of 6 River Systems’ technology and Deliverr’s software helps Shopify forward-position merchants’ inventory for timely fulfillment.
Shopify envisions merchants will be able to “fulfill and deliver orders quickly and reliably” from warehouses, while providing accurate delivery dates through Shop Promise, per an investor presentation.
To determine a merchant’s eligibility to use Shop Promise, Shopify looks into “which brands consistently ship reliably,” Finkelstein said. According to the company’s website, eligibility requirements include:
- Fulfill orders from at least one US location;
- Have the Shop channel installed and Shop Pay activated;
- Maintain a shipping volume of at least 25 orders within a 28 day period;
- Ensure that 25% or more of total orders are delivered in 5 calendar days or less;
- Deliver 90% of Shop Promise orders within the communicated delivery expectation; and
- Offer shipping prices of $20 or less on 90% of total orders shipped domestically in the US
Companies that are eligible — and remain so — can take advantage of the Shop Promise badge, which indicates a product has been verified for delivery in five calendar days or less. However, RMW Commerce Consulting founder and CEO Rick Watson said in a LinkedIn post that this is one of the reasons Shop Promise won’t be a competitor to Amazon Prime and its “Buy with Prime” offering anytime soon.
“5 days? In 2023?” Watson wrote. ”…I’m guessing they want the promise to show up more, but if it is ‘meh,’ doesn’t that water down the promise? Prime means something because you know what to expect when you see the badge.”
Buy with Prime allows Prime members to shop on outside websites, with Amazon handling those orders through its own fulfillment network. The program expanded to all U.S. merchants earlier this year.
Source: Supplychaindive