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style="display: none;"> <a href="https://www.practicalecommerce.com/tag/podcasts" data-wpel-link="internal"> <img loading="lazy" src="https://www.practicalecommerce.com/wp-content/themes/pec/images/Ecommerce-Conversations_lg.jpg" width="970" height="250" /> </a> </div>  <div class="zone" id="lKEmjrEdjFH3G6i0GKUi" data-responsive="true"> <script type="text/javascript"> var _avp = _avp || []; _avp.push({ tagid: 'lKEmjrEdjFH3G6i0GKUi', alias: '/', type: 'banner', zid: 2, pid: 0, secure: true, callback: pecAdLoaded }); </script> </div>  </div> <div class="main row" style="min-height:500px;"> <div class="content "> <div class="row"> <a href="https://www.practicalecommerce.com/category/management/shipping-fulfillment" class="cat-link" data-wpel-link="internal"> Shipping & Fulfillment </a> <h1 class="entry-header">Shopify Buys Logistics Company Deliverr</h1> </div> <div class="row content-pad"> <div class="column col8"> <div class="entry-meta-con"> <div class="entry-meta meta-detail"> <h6>May 16, 2022 • <a rel="author" title="Posts by Marcia Kaplan" href="https://www.practicalecommerce.com/author/marcia-kaplan" data-wpel-link="internal">Marcia Kaplan</a></h6> </div> <div class="pec-social-post"> <ul> <li><a onclick="ga('send','event','Article Top','Social Linkedin');" data-via="practicalecomm" data-url="https://pec-ly.com/?6j4T" target="_blank" data-size="small" data-dir="left" rel="noreferrer external noopener" href="https://www.linkedin.com/shareArticle?mini=1&url=https%3A%2F%2Fpec-ly.com%2F%3F6j4T&title=Shopify+Buys+Logistics+Company+Deliverr" title="Click to share this post on Linkedin" data-wpel-link="external"><img src="https://www.practicalecommerce.com/wp-content/themes/pec/images/linkedin.svg" width="40" height="40" alt="Linkedin Share"/></a></li> <li><a onclick="ga('send','event','Article Top','Social Reddit');" data-via="practicalecomm" data-url="https://pec-ly.com/?6j4T" target="_blank" data-size="small" data-dir="left" rel="noreferrer external noopener" 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data-link="https://pec-ly.com/?6j4T"><img src="https://www.practicalecommerce.com/wp-content/themes/pec/images/share-icon.svg" width="40" height="40" alt="Share link"/><div class="copy-alert" style="display: none;">Link copied</div></a></li> </ul> </div> </div> <div class="entry-content"> <p>Shopify announced earlier this month that it would acquire California-based ecommerce fulfillment company <a href="https://deliverr.com/" data-wpel-link="external" target="_blank" rel="external noopener noreferrer">Deliverr</a> for $2.1 billion in cash and stock, representing the largest acquisition in Shopify’s history.</p> <p>Founded in 2017, Deliverr leases warehouse space and uses the fulfillment departments of those warehouses to pick and pack ecommerce orders. Deliverr distributes more than a million orders a month, spread across UPS, FedEx, and USPS. With the acquisition, Shopify will add 400 employees to its headcount.</p> <h3>Deliverr Acquisition</h3> <p>A strength of Deliverr is its use of predictive analytics to anticipate demand for products and pre-position them close to geographical areas of anticipated need, as well as to determine the best delivery method.</p> <div id="attachment_1503334" style="width: 610px" class="wp-caption alignnone"><img fetchpriority="high" decoding="async" aria-describedby="caption-attachment-1503334" class="wp-image-1503334" title="Deliver home page" src="https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-570x213.jpg" alt="Deliver home page" width="600" height="225" srcset="https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-570x213.jpg 570w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-300x112.jpg 300w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-768x288.jpg 768w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-1536x575.jpg 1536w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-2048x767.jpg 2048w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-150x56.jpg 150w, https://www.practicalecommerce.com/wp-content/uploads/2022/05/Deliverr-500x187.jpg 500w" sizes="(max-width: 600px) 100vw, 600px" /><p id="caption-attachment-1503334" class="wp-caption-text">Shopify’s acquisition of Deliver, at $2.1 billion in cash and stock, is the largest in the company’s history.</p></div> <p>Shopify says that Deliverr will combine with Shopify Fulfillment Network (SFN), the company’s existing fulfillment service that merchants on its platform use to store inventory and fulfill orders.</p> <p>Deliverr’s technology will also power Shop Promise, a new service that will provide customers with two-day and next-day delivery.</p> <p>After the acquisition, Shopify will offer new inventory storage, freight, and returns handling capabilities accessible to merchants whether or not they use SFN.</p> <p>Shopify says it will also roll out a warehouse management system across its facilities by the end of the second quarter.</p> <p>In 2020, Shopify acquired 6 River Systems, a warehouse automation technology provider, which will integrate with Deliverr.</p> <p>In a blog post, Shopify <a href="https://news.shopify.com/oh-ship-shopify-to-acquire-deliverr-for-21b-building-the-future-of-global-logistics-for-independent-brands" data-wpel-link="external" target="_blank" rel="external noopener noreferrer">stated</a> that the Deliverr acquisition would provide “simplified multichannel inventory management with a single place for merchants to ship their inventory for different sales channels. These include a merchant’s online store, brick-and-mortar locations, wholesale customers, marketplaces including Amazon, eBay, Etsy, and Walmart, and platforms like Google, Facebook, Instagram, and TikTok.”</p> <p>Given the increasing dissatisfaction with Amazon FBA and its changing inventory rules and <a href="https://www.practicalecommerce.com/rivian-write-down-moves-amazon-to-q1-2022-net-loss" data-wpel-link="internal">increased costs for sellers</a>, Shopify has emerged as an alternative for merchants who prefer selling direct to consumers via their own websites.</p> <h3>Mirroring Amazon</h3> <p>Amazon somewhat blunted the advantage of Shopify’s Deliverr acquisition with the announcement of its Buy with Prime program earlier this month. This service lets a select group of FBA merchants offer Prime deliveries through their own online stores.</p> <p>Amazon intends to expand the program to include merchants that don’t use its fulfillment service and eventually to those companies that don’t sell on its platform.</p> <p>Shopify and Amazon will now compete for the same merchants, regardless of how and where they sell their products.</p> <p>Deliverr emphasizes one of its advantages over Amazon FBA merchants — it does not limit the amount of inventory a merchant can store in its warehouses.</p> <p>Also, with the acquisition of Deliverr, Shopify has narrowed Amazon’s competitive advantage since Shopify can now consistently deliver in a one or two-day timeframe.<br /> </p> <h3>Financial Results</h3> <p>While Shopify’s Q1 2022 revenue of $1.2 billion was 22% higher than the same period in 2021, it missed analysts’ estimates of roughly $1.25 billion.</p> <p>Shopify’s net loss for the first quarter of 2022 was $1.5 billion, or $11.70 per share, compared with net income of $1.3 billion, or $9.94 per share, for the first quarter of 2021. As a result, Shopify’s stock fell 14.7% to $413.64 resulting in an overall 2022 decline of 70%.</p> <p>With the acquisition of Deliverr, Shopify is banking on fulfillment to drive revenue and help it regain profitability.</p> <p><a href="https://www.practicalecommerce.com/daily-drone-deliveries-surpass-2000-globally" data-wpel-link="internal">Efficient fulfillment</a> and next-day or two-day delivery are key differentiators when the supply chain is volatile and <a href="https://www.practicalecommerce.com/charts-global-parcel-shipping-volume-transit-times" data-wpel-link="internal">inventory constraints</a> exist.</p> <p>Shopify’s guidance for 2022 predicts that year-over-year revenue growth will be minimal in the first half of the year and highest in the fourth quarter of 2022.</p> <p>Almost all major ecommerce platform players have acknowledged that they will not be able to sustain the high growth rates they enjoyed at the pandemic’s peak.</p> </div> <div class="post-footer"> <div 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