In a recent announcement, Shopify revealed that it is selling its logistics unit to supply chain technology firm Flexport, a strategic move aimed at enhancing its competitiveness against major e-commerce rivals such as Amazon and Walmart. This move is a significant departure from the path Shopify has been pursuing over the past few years, as it had been expanding its own logistics and order-fulfillment operations.
The logistics unit includes last-mile delivery start-up Deliverr, which Shopify acquired for a whopping $2.1 billion in May last year, making it its largest acquisition to date. As part of the deal, Shopify will receive shares that represent approximately a 13% equity interest in Flexport, which will take its ownership to a high-teens level.
“This allows Flexport to do what they do best, and allows Shopify to go back to doing what we do best, which is building incredible software for e-commerce,” said Shopify President Harley Finkelstein. The agreement enables Shopify to continue to leverage its fulfillment network app, which allows merchants to manage their logistics processes.
The partnership between the two companies was established in February, allowing Shopify merchants to access Flexport’s freight services, including booking international shipments from suppliers to their warehouses. Furthermore, Flexport has also listed Shopify as one of its investors.
Flexport, which was listed as the top company on CNBC’s Disruptor 50 list last year, has become one of the most valuable logistics startups, raising roughly $2.3 billion to date. The company’s services in ocean, air, truck, and rail-freight forwarding and brokerage became vital tools as supply chain bottlenecks rocked the global economy in the past year.
According to Flexport CEO Dave Clark, who was hired away from Amazon last June, the acquisition will allow Flexport to scale the shipping capabilities it offers to Shopify merchants and other online businesses. “We have very much the same vision that Shopify has. We’re just about the success of the merchant and our customers, and we don’t care if they sell in their stores or on Amazon or on Walmart,” Clark said in an interview.
Flexport will be Shopify’s official logistics provider, and a preferred partner for its “Shop Promise,” a badge displayed on Shopify merchants’ listings that guarantees next- and two-day delivery, similar to Amazon’s Prime delivery promise.
Shopify is expected to report its first-quarter earnings on Thursday, before the bell.