Shopify’s Recent Divestments and New Strategy Shift.

Shopify’s Recent Divestments and New Strategy Shift.

Shopify Inc has announced that it will divest its logistics arm, which it had invested in over the past few years, as part of its strategy to offer one-stop service to merchants selling on its platform. In an effort to support merchants selling on its platform with one-stop service, Shopify Inc has divested its logistics arm, which it had heavily invested in over the past few years. The company has sold its logistics unit in an all-stock deal, which includes Deliverr Inc, to freight forwarder Flexport. In exchange for the sale, Shopify has received a 13% stake in the startup it had previously invested in. Additionally, Shopify has also sold 6 River Systems, a retail fulfillment automation startup, to OCADA, a British online supermarket technology provider for an as of yet undisclosed amount.

In the wake of the stabilization of the e-commerce boom investors have been closely scrutinizing Shopify’s spending on the fulfillment network, fearing that the capital-intensive project could weigh on Shopify’s revenue and slow growth. In response to the recent changes Shopify President Harley Finkelstein said that the shift in strategy was a result of prioritizing product acceleration.

Finkelstein said in an interview, “We can offer great value to our merchants. Flexport can get tons of new customers to use their incredible product, and we can go back to focusing on what we do best.”

As the official logistics partner for merchants on Shopify, the deal will enable Flexport to expand into fulfillment and last-mile delivery. Flexport, based in San-Francisco, will then be able to utilize its over 50 fulfillment sites to provide services across the country and then to compete head to head with Inc. In February 2022, Flexport was last valued at $8 billion in a funding round of $935 million which was led by Horowitz and MSD Partners.

Flexport CEO Dave Clark stated, “We want to move toward an end-to-end solution under one technology stack, from manufacturer to store door, and this really accelerates our journey there. We expect to use this as a real catalyst for growth.”

Shopify, in a second round of significant layoffs within a year, has announced that it would let go of 20% of its staff. This comes as it reports earnings that are stronger than expected. Following the announcement, Shopify shares were up almost 20% in early trading on Thursday.

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