Shopify and Deliverr have finally collaborated after President Harley Finkelstein said, the process will be complete by Q1, in a Q3 earnings call. Deliverr is a company that specializes in providing fulfilment networks and storage spaces and was acquired by Shopify in July.
This unification aims to provide the sellers with a robust fulfilment network attracting more and more merchants to join hands with Shopify. The first unification happened in Atlanta and the number of merchants in the area holding a shop with Shopify has already seen a sharp rise.
“This unified network will enable Shopify to operate a small number of regional hubs that will serve several functions, including cross-docking, multichannel distribution, inventory balancing and some local fulfilment,” said Finkelstein, the President of Shopify.
“When done right, fast and reliable fulfilment can significantly increase cart size, conversion rate, order value and turn buyers into repeat customers,” he added.
History of Shopify and Deliverr
Deliverr is responsible for a robust fulfilment network by making storage, dispatch and delivery easier. Shopify launched its fulfilment network in 2019 and since then, they have rapidly increased its investments in companies that aim to smoothen the fulfilment networks. The objective of entering this side of the market is to make distribution easier for the sellers on Shopify and to compete with the biggest player in the market, Amazon.
Earlier the brand may have thought that it would enter the distribution market with an idea of a capital-light model, however, it soon realized that the investments need to be big and then only a simplified distribution can be ensured.
In July 2022, Shopify invested in the fulfilment market and acquired Deliverr for $2.1 Billion to ensure a successful network of warehouse, carrier and delivery partners to deliver orders placed by the buyers. The brand aims to create a robust ‘vertical integration of logistics, as the CEO of Shopify called it while acquiring Deliverr.
The CEO agreed that the investment was big and the company had to cut down its profits to do so, however, was certain that this was the right move.
“We are keenly aware of what’s happening around us,” said CFO, Amy Shapero. “We anticipate that inflation and the continued softness in consumer spending on goods will persist through the remainder of the year,” she added.
What is Deliverr and what do they do?
Deliverr is a leading brand in the field of fulfilment technology that delivers over a million orders every month in the United States. The brand was established in 2017 and was acquired by Shopify for a whopping $2.1 Million in July.
Unification with Deliverr will ensure fast delivery as Shopify now expects to offer the option of one to two days delivery once the unification is complete. Given that Deliverr is one of the leading brands in this technology, Shopify is expected to make huge profits once they’re able to streamline its fulfilment network. Fast delivery would mean more consumers and a robust network for storage, and delivery will also attract more merchants.
“Our technology and expertise in inventory management, inventory placement, and demand chain combine perfectly with Shopify’s roadmap, enabling us to now build an end-to-end logistics platform together,” said Harish Abbott, co-founder and CEO of Deliverr on the news of the acquisition of the brand.
“Shopify has been building the future of merchant-first fulfilment solutions, and our team has a track record of helping businesses of all sizes streamline their operations. We’re excited to join Shopify in their mission to make commerce better for everyone while democratizing shipping and fulfilment for independent entrepreneurs,” he added.
What changes are expected after the unification?
First and foremost, as discussed above, this unification will drastically reduce the delivery time. Shopify is expected to offer one-day delivery like Amazon after the unification is complete. This will not only make the merchants happy but will also strongly increase Shopify’s customers.
One way of achieving this fast delivery is by placing storage spaces for products from where they’re expected to be ordered the most. Demand-specific storage spaces will ensure that the goods are delivered in less than 2 days. For instance, if a product like woollen clothes is expected to be in high demand in cold regions, their inventory will be placed in that region itself, instead of shipping from a different state.
“Our goal is to not only level the playing field for independent businesses but tilt it in their favour—turning their size and agility into their superpower,” said Tobi Lütke, founder and CEO of Shopify, while acquiring Deliverr.
“Together with Deliverr, Shopify Fulfillment Network will give millions of growing businesses access to a simple, powerful logistics platform that will allow them to make their customers happy over and over again,” he added.
Another interesting feature that Shopify is expected to add is to allow merchants to add a badge to their products called “Shop Promise”. This badge allows consumers to know that this merchant can deliver in a day or two. The same badge will also be available across multiple platforms such as Google, Instagram, Facebook etc. for the merchant to spread the word benefiting both merchants and consumers.
An efficient and effective fulfilment network for Shopify is expected from this successful unification of Shopify and Deliverr, a company specializing in providing fulfilment networks and inventories to merchants. It remains to be seen how it transforms Shopify’s existing fulfilment technology.
