Shopify Transfers Logistics Business to Flexport

Shopify's logistics arm officially transferred management rights to supply chain technology company Flexport, from early May 2023.

Shopify’s logistics arm includes last-mile delivery startup Deliverr, which Shopify bought in May 2022 for $2.1 billion, one of the company’s largest acquisitions ever.

Under the deal, Shopify will receive an equity interest of about 13% in Flexport. The two companies are stepping up their collaboration to gain a competitive edge against big rivals like Amazon and Walmart.

In February, they announced a strategic partnership that gives Shopify sellers access to Flexport’s freight services. Those categories include booking international shipments from suppliers to their warehouses. In return, Flexport counts Shopify as an equity investor.

Shopify President Harley Finkelstein said in an interview that they already had their own fulfillment chain, but integrating with Flexport’s existing systems and infrastructure makes these segments much faster and more convenient.

"Transferring the logistics business to Flexport allows them to maximize their freight shipping strengths. Shopify can now focus on building optimal software for their e-commerce platform," added Shopify's president.

Mr. Harley Finkelstein, COO Shopify. Photo: Scott Mlyn — Mr. Harley Finkelstein, COO Shopify. Photo: *Scott Mlyn*

Flexport is now one of the most valuable logistics startups after raising about $2.3 billion. Its ocean, air, truck, and rail freight brokerage and forwarding services have become a key tool in addressing the crisis that disrupted global supply chains last year.

The logistics company has also added several executives from rival companies to its staff, including former Amazon CEO Dave Clark. Before moving to Flexport in June 2022, Clark spent nearly two decades building the e-commerce giant’s shipping and logistics division.

Dave Clark said that the acquisition of the logistics segment will help Flexport expand its shipping capabilities, becoming a powerful arm to support retailers on Shopify and many other online businesses.

"The difference between the services and values that Flexport can bring to partners and users compared to competitors is synchronization. The new logistics and warehouse chain formed from the recent cooperation of the two companies will be applied to an entire system, store or platform," the CEO added.

At the same time, Dave Clark also affirmed that Flexport shares the same vision as Shopify. They only care about the success of their sellers and customers, regardless of whether these partners are doing business on other platforms.

Flexport will soon be an official Shopify fulfillment provider, with the company's shipping options displayed in merchants' options on the platform.

The company also guarantees two-day delivery after an order is placed, similar to what Amazon’s Prime delivery service promises. Shopify will also keep its Shopify delivery app so that sellers can manage their logistics processes.

Caution (According to CNBC )

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