Shopify is divesting its logistics division to supply chain technology company Flexport, the companies announced on Thursday.
This decision marks a significant shift for Shopify, which had dedicated years to developing its own logistics and order-fulfillment infrastructure.
The logistics unit includes Deliverr, a last-mile delivery startup that Shopify acquired last May for $2.1 billion, marking its largest acquisition to date.
Under the terms of the deal, Shopify will receive stock representing approximately a 13% equity stake in Flexport, which will increase Shopify’s ownership to the high teens percentage, according to the company’s statement.
The transaction deepens the partnership between Shopify and Flexport as Shopify aims to strengthen its position against e-commerce giants like Amazon and Walmart.
The companies first collaborated in February, providing Shopify merchants with access to Flexport’s freight services, including the ability to book international shipments from suppliers to warehouses. Flexport also has Shopify as an investor.
Shopify President Harley Finkelstein noted that after an effort to develop its own fulfillment and logistics operations, it became apparent that Shopify could better offer these services through integration with Flexport.
“This allows Flexport to do what they do best, and allows Shopify to return to what we do best, which is building incredible software for e-commerce,” Finkelstein said.
Flexport has emerged as a leading logistics startup after raising approximately $2.3 billion. The company’s services in ocean, air, truck, and rail-freight forwarding and brokerage have been crucial amid global supply chain disruptions.
Flexport has recently expanded its team with former Amazon executives, including CEO Dave Clark, who joined Flexport last June after nearly two decades at Amazon, where he developed the company’s transportation and logistics division.
Clark stated that the acquisition will enhance Flexport’s ability to scale shipping services for Shopify merchants and other online businesses.
“The key difference between what we offer and what Amazon or Walmart provide is that our services are not limited to one system or platform,” Clark explained. “We share Shopify’s vision of focusing on merchant and customer success, regardless of where they sell.”
Flexport will become Shopify’s official logistics provider and a preferred partner for Shopify’s “Shop Promise,” a badge that ensures next- and two-day delivery, akin to Amazon’s Prime delivery.
Shopify will also continue to use its Shopify Fulfillment Network app to manage its logistics operations. The company is expected to report its first-quarter earnings before the market opens on Thursday.
