Shopify spends $2.1 billion on Deliverr to provide an end-to-end logistics platform

The news: Shopify agreed to pay $2.1 billion for ecommerce fulfillment startup Deliverr.

  • It plans to fold Deliverr into its Shopify Fulfillment Network (SFN), which is a service that retailers use to store inventory and fulfill orders, to form what it calls an “end-to-end logistics platform.”
  • Shopify will also leverage Deliverr to power a new service it calls Shop Promise, which will offer consumers next- and two-day delivery options.

More on this: Deliverr leverages predictive analytics and machine learning to allocate third-party sellers’ inventory across different fulfillment centers based on consumer demand. The technology also aims to determine the best shipping method to ensure items quickly arrive at customers’ doors.

An eye on Amazon: The deal rounds out Shopify’s fulfillment capabilities at the same time that Amazon is encroaching on the former’s turf.

  • Amazon recently launched Buy with Prime, a new feature that enables third-party merchants to appeal to Amazon Prime members by leveraging the retail giant’s massive logistics infrastructure to fulfill orders on their own websites.
  • Shopify is positioning itself as an anti-Amazon that “not only level[s] the playing field for independent businesses, but tilt[s] it in their favor—turning their size and agility into their superpower,” said CEO Tobi Lütke in a blog post.

The big takeaway: Shopify generated $1.2 billion in Q1, falling short of analysts’ expected $1.25 billion.

  • It is hardly alone among ecommerce companies in reporting disappointing results.
  • But building out its logistics capabilities, while costly, could well be a significant long-term revenue driver that will be increasingly important given the threat of Buy with Prime.