Shopify Integrating Deliverr to Build ‘Elastic Warehouse Capacity’

Shopify is building an “elastic warehouse capacity” that’s more flexible than that of Amazon.

As Shopify continues to integrate Deliverr — the eCommerce fulfillment and order storage provider it acquired for $2.1 billion last year — it’s finding that it can build a distribution network that is cost-effective for its merchants, offers speedy delivery to the merchants’ customers and gives Shopify flexibility, without the fixed costs of a network like Amazon’s, Supply Chain Dive reported Tuesday (March 14).

Only a small percentage of Shopify merchants are currently using the Deliverr fulfillment services, but Shopify expects that to change once it completes the integration, according to the report, which cited comments at recent conferences by Shopify executives.

With Deliverr, Shopify can offer its merchants fulfillment capabilities while remaining asset light by using software and working with a network of partners that include warehouses, carriers and last-mile delivery providers, according to the report.

This enables the firm to avoid the fixed costs and excess capacity that Amazon found itself burdened with when it ramped up its fulfillment capabilities during the pandemic and then encountered a slowdown in demand, the report said.

“Some of the technology we got from Deliverr allows us to do this in a distributed way, and then tackle some of the things which Amazon and others have in terms of problems we don’t have,” Shopify Chief Financial Officer Jeff Hoffmeister said March 8 during a Morgan Stanley Technology, Media and Telecom conference.

As PYMNTS reported Feb. 21, Shopify, Amazon and Walmart have found that there is money to be made and merchant loyalty to be minted by offering a single point of access to the logistics that handle the steps that happen after a consumer clicks a buy button.

Shopify said in a recent investor presentation that its fulfillment efforts aim to “address merchants’ pain points” and its efforts with Deliverr and Flexport help provide that continuum of services.

When Shopify completed its acquisition of Deliverr in July, Aaron Brown, CEO of Shopify’s logistics group, said the move would give independent businesses access to an end-to-end logistics platform.

“Our combined team strengthens [Shopify Fulfillment Network’s] ability to manage merchant inventory from ‘port to porch’ as merchandise arrives at domestic ports, travels to and throughout the warehouse network, gets distributed across sales channels and ultimately arrives at the consumer’s doorstep,” Brown said at the time.

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