Shopify Inc (SHOP.TO) has divested its logistics arm, reversing its previous strategy of aggressively investing in fulfilment networks, the Canadian e-commerce platform announced on Thursday.
It has sold its logistics unit, which includes Deliverr Inc, which it purchased for $2.1 billion less than a year ago, to goods forwarder Flexport in an all-stock transaction in exchange for a 13% stake in the startup in which it previously invested.
In February 2022, Flexport was valued at $8 billion in a $935 million funding round led by Andreessen Horowitz and MSD Partners.
Shopify also announced the sale of 6 River Systems, a retail fulfilment automation startup it paid $450 million for in 2019, to British online supermarket technology provider Ocado (OCDO.L) for an undisclosed sum.
The decision to expand into logistics services was part of Shopify’s goal of providing one-stop service to merchants selling on its platform.
As the e-commerce boom brought by the global pandemic subsides and Shopify’s revenue growth slows, its spending in the fulfillment network has been more closely scrutinized by investors, who worry the capital-intensive project could weigh on earnings.
Shopify President Harley Finkelstein said the shift in strategy was a result of prioritizing product acceleration.
“We can give our merchants great value. Flexport gets tons of new customers to use their incredible product and we can go back to focusing on what we do best,” he said in an interview.
San Francisco-based Flexport will expand into fulfillment and last-mile delivery through the deal as the official logistics partner for merchants on Shopify.
Flexport, led by former Amazon executive Dave Clark, will provide fulfillment services to stores and homes through over 50 fulfillment sites across the country following the deal, competing head to head with Amazon.com Inc (AMZN.O).
“We want to move toward end-to-end solution under one technology stack, from manufacturer to store door, and this really accelerates our journey there,” Clark said. “We expect to use this as a real catalyst for growth.”