Flexport buys Shopify Logistics in move to build single source fulfilment hub

The logistics platform provider Flexport has acquired Shopify Logistics, including its  Deliverr unit, saying the move makes it easy for businesses to plan, visualize, and execute the movement of goods from manufacturer to the customer's store or door from a single technology platform.

Terms of the deal were not disclosed, but the 10-year-old San Francisco startup is richly backed with venture capital, having raised a whopping $935 million round of funding one year ago. Flexport also added seasoned leadership when it hired logistics guru Dave Clark from e-commerce leviathan Amazon as its CEO.

In Flexport’s vision, traditional supply chain technology has failed to create a single system for end-to-end supply chain planning, visibility and execution. The company says it now intends to change all that, reducing out-of-stocks for customers, costs for companies, and decreasing the environmental impact of the movement of goods.

"For Flexport, this acquisition enables our vision for a full digital transformation of the global supply chain that we will bring to all customers. This democratization and pooling of scale will level the playing field for cost and speed of delivery for all businesses, not just the largest corporations in the world," Flexport CEO Dave Clark said in a release. "The end-to-end supply chain industry has not undergone the technological breakthroughs and data platforming we have seen in other sectors. Flexport is changing that. After the past several years of public discourse focusing on what's wrong with the supply chain, it's exciting to look ahead to how Flexport can bring solutions and make the global supply chain better for everyone."

As part of the acquisition, Flexport will also serve the millions of Shopify merchants by becoming the official Shopify Logistics Partner and provider of Shop Promise, the service that enables transparent shipping timelines, including two-day and next-day delivery options, to customers of Shopify merchants. 

From Shopify’s point of view, the move will shrink the company by 20% as many employees leave the company through downsizing or the shift to a new employer.

In a message to staff, Shopify founder and CEO Tobi Lütke offered a severance package to those losing their positions, and said that those who remained would see the company shift its focus “to pay unshared attention to our mission” by following its main quest instead of a side quest.

“Shopify’s main quest is to make commerce simpler, easier, more democratized, more participatory, and more common. I think that we have built the best commerce platform in the world for that,” Lütke said. “Technological progress always arcs towards simplicity, and entrepreneurs succeed more when we simplify. But now we are at the dawn of the AI era and the new capabilities that are unlocked by that are unprecedented. Shopify has the privilege of being amongst the companies with the best chances of using AI to help our customers. A copilot for entrepreneurship is now possible. Our main quest demands from us to build the best thing that is now possible, and that has just changed entirely.”