San Francisco-headquartered e-commerce fulfilment tech provider Deliverr is now set to be acquired by e-commerce giant Shopify for $2.1Bn. Shopify aims to create an end-to-end powerful logistics platform for millions of merchants that will give them greater control of their inventory across all sales channels.
This comes even as Shopify’s shares fell steeply by over 17% after markets opened today as its Q1 2022 results fell short of analyst expectations. It clocked $1.2 billion in revenue, short of Wall Street’s estimate of $1.24 billion.
This acquisition is the largest in the Ottawa-headquartered Shopify’s 16-year-old history. Shopify has plans to integrate Deliverr’s network management software, team of software engineers, operations and customer service personnel, as well as its asset-light network of warehouse, carrier, and last-mile storage and delivery partners to its e-commerce ecosystem.
It will also boost Shop Promise, a new service that will provide customers with two-day and next-day delivery, and expanded options for storage, freight, inventory preparation, and returns.
The transaction, which is a mixture of cash and stock, will see all of Deliverr’s 400 employees join Shopify to add to the current size of Shopify’s fulfilment team. About 80% of the purchase price (which amounts to around $1.68 billion) will be paid in cash, while the remaining 20% (which comes to around $420 million) will consist of Shopify Class A shares.
Bloomberg first reported the inklings of the deal in April. In the same month, The Globe reported that the move was part of an “an ambitious strategic shift at Shopify to rival Amazon.” And it might also help cement Shopify’s spot as the largest e-commerce platform in the US in terms of market share (32%), according to Oberlo.
SFN, Deliverr, and 6 River Systems (which it purchased earlier for $450 million) will be combined into a broader logistics network, according to the company.
The five-year-old Deliverr, founded by former Symphony Commerce colleagues Harish Abbott and Michael Krakaris, has raised over $490 million in capital so far. More recently, it raised a $240 million Series F round that was led by Tiger Global and valued the company at $2 billion post-money.
Deliverr company provides fulfillment services to e-commerce merchants on marketplace platforms using predictive analysis and machine learning. Today, it delivers over a million orders per month for thousands of merchants across the US as it anticipates the demand for products based on variables, including demographics and geography, and then prepositions items that are close to demand and determines the best delivery method to ship to customers.
“Shopify has been building the future of merchant-first fulfillment 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 fulfillment for independent entrepreneurs,” said Deliverr cofounder and CEO Harish Abbott in a statement.