Shopify's logistics arm officially transferred management rights to supply chain technology company Flexport, from the beginning of May 5.
Shopify's logistics arm includes last-mile delivery startup Deliverr, which Shopify bought in May 5 for $2022 billion. It's also one of the company's largest-ever acquisitions.
Under the agreement, Shopify will receive about 13% of the equity interest in the stock in Flexport. The two companies are strengthening their cooperation to increase their competitive advantage over big players like Amazon and Walmart.
Since February, they have announced a strategic partnership, giving Shopify sellers access to Flexport's freight services. Those categories include booking international shipments from suppliers to their warehouses. In return, Flexport also considers Shopify as an equity investor.
Shopify president Harley Finkelstein said in an interview that they already have their own complete logistics chain. However, the integration with Flexport's existing system and infrastructure makes these segments much faster and more convenient.
“Transferring the logistics business to Flexport allows them to maximize their freight transport strengths. Shopify can now focus on building optimized software for their e-commerce platform,” added Shopify president.
Mr. Harley Finkelstein, COO Shopify. Image: Scott Mlyn
Flexport is currently one of the top high-value logistics startups after successfully raising around $2,3 billion. Flexport's sea, air, truck and rail freight forwarding and brokerage services have gradually become an important tool in helping to solve the crisis issues that disrupted global supply chains last year.
This logistics company has also added to its staff a few executives from rival companies, including Dave Clark - former CEO of Amazon. Before moving to Flexport in June 6, Clark had nearly two decades of work and contributed to building the shipping and logistics department of the "big" in the e-commerce industry.
Dave Clark believes that the acquisition of the logistics segment will help Flexport expand its shipping capabilities, becoming an effective arm to support retailers on Shopify and many other online businesses.
“The difference between the services and value Flexport can bring to partners and users compared to competitors is synchronization. The new logistics and logistics chain formed from the cooperation of two companies recently will apply to an entire system, store or platform," the CEO added.
At the same time, Dave Clark also affirmed that Flexport has 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.
Going forward, Flexport will be Shopify's official logistics provider. This company's shipping option logo will show up in the merchant's pick list on the platform.
The unit also guarantees delivery within two days after the order is placed successfully, similar to what Amazon's Prime delivery service promises. At the same time, Shopify will still keep the Shopify delivery app so merchants can manage their logistics.
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