FLEXPORT ACQUIRES SHOPIFY LOGISTICS

Forwarder expands its services into last-mile and e-commerce fulfillment, accelerating plans to offer logistics from ‘factory floor to customer door’, and becoming the official logistics partner for the Shopify e-commerce retail giant’s millions of merchants

US freight forwarding and logistics provider Flexport has agreed to buy the assets of Shopify Logistics, the logistics and fulfilment arm of the Shopify e-commerce retail platform and point-of-sale specialist, expanding its global services into last-mile and e-commerce fulfillment “to all customers” and becoming the ‘official logistics partner’ for Shopify’s millions of merchants.

Under the terms of the agreement, Shopify will receive stock representing a 13% equity interest in Flexport, on top of an existing equity interest in Flexport that it acquired last February as a strategic investor in the California-headquartered forwarder’s $935 million ‘Series E’ funding round, which took the total equity raised by Flexport to more than $2 billion and raised its valuation to $8 billion.

As part of last year’s investment, Shopify and Flexport “forged a strategic relationship and a shared vision to build a unified supply chain network for Shopify merchants from factory floor to customer door”. This led to the launch in February of the Flexport App on Shopify –“a one-stop, integrated solution designed to allow small and mediumsized businesses (SMBs) to meet their global trade needs”. The app initially enables merchants using Shopify to quote, book, track, and ship products to the US – including LCL and FCL services – and obtain customs clearance, insurance and financing. Described by Flexport as “the first milestone in Flexport’s strategic partnership with Shopify to empower SMBs with the technology and tools they need to grow their businesses globally”, Shopify’s millions of merchants were also offered “access to real-time cost estimates and the ability to leverage enterprise-grade reporting and analytics to remove common barriers to freight forwarding”.

Sale of Shopify Logistics

But after Shopify over-extended parts of its business in anticipation of continuing growth rates similar to those during the pandemic, Shopify on 3 May announced significant workforce cuts and the sale of most of the assets of Shopify Logistics, including its Deliverr business, to Flexport – along with the sale of Shopify’s ‘6 River Systems’ collaborative AMR (autonomous mobile robot) fulfilment solutions business to Ocado.

A senior source at Flexport said this was part of Flexport’s strategic plan to provide a “shopfloor to final delivery” service, “and this opportunity came, and accelerates that plan.”

Flexport CEO Dave Clark, a former long-standing Amazon executive who was Amazon’s SVP for worldwide operations for eight years until 2021, commented:

This is an exciting time for Flexport. This acquisition is the last piece of the puzzle that enables us to drive technology-fueled solutions across the entire product life cycle from the manufacturer’s floor, across the oceans and skies, through ports and fulfillment, and, now, right into the hands of customers. Over the past six months, we’ve taken some important strategic steps, building off of the amazing momentum Flexport has had, to position the company to achieve our audacious goals. We’ve built a strong leadership bench with some of the best logisticians, technologists, and operators in the world. We are also heavily invested in hiring hundreds of software engineers who are joining our existing teams with a passion for rapidly building for customers. Across all our teams, we have the talent, focus, vision and the tenacity at Flexport to change the world.

He described the Shopify Logistics acquisition as “one big step on an already incredible journey that Flexport is taking to modernize and change the future of the supply chain. Another central goal for us is to level the playing field for small businesses. In the U.S., in a world where the e-commerce market size is poised to surpass $8 trillion in 2026, one-in-four small businesses in America still do not have an online store. This is a massive number of companies on the sidelines. We want to welcome them into the e-commerce ecosystem and support their supply chain needs; you shouldn’t have to be the biggest company in the world to have easy, cost-effective and fast supply chain solutions.

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.