A deal worth about US$2.5-billion to acquire San Francisco startup Deliverr is expected to be finalized before Shopify’s first-quarter earnings call on May 5, according to a senior source at Shopify.Justin Tang/The Canadian Press
Shopify Inc. SHOP-T is attempting to make its most significant acquisition yet to expand its warehousing and delivery services, just as Amazon.com Inc. AMZN-Q announces a new strategy that will put the Seattle-based global tech giant in more direct competition with the Ottawa-based e-commerce platform.
A deal worth about US$2.5-billion to acquire San Francisco startup Deliverr is expected to be finalized before Shopify’s first-quarter earnings call on May 5, according to a senior source at Shopify. The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
A final decision has not yet been made, and the deal could fall apart, the source said. (Deliverr has been using its warehouses and software to facilitate sales from eBay, Google Shopping and Walmart.) However, if all goes as planned, Shopify will be able to tap into a nationwide fulfilment network through Deliverr’s warehouses across the United States. This acquisition is part of an ambitious strategic shift at Shopify to rival Amazon, the source added.
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On Thursday, Amazon said a feature it calls “Buy With Prime” will now let some merchants who ship products through the company add a new button on their own vendor websites. The button would allow Amazon customers with Prime memberships to purchase directly from different retail websites that partner with the company, according to a news release.
That means customers will be able to maintain their free-shipping and same-day delivery benefits where applicable, Peter Larsen, Amazon’s vice-president of Buy With Prime, said in the release. “Allowing merchants to offer Prime shopping benefits on their own direct-to-consumer online stores is an exciting next step in our mission to help merchants of all sizes grow their business,” Mr. Larsen said.
The new feature is invitation-only for now. A group of U.S. merchants will be picked from millions of global sellers, Amazon said. They will be charged fees for the Buy With Prime button. The news release did not disclose the exact structure or nature of the fees.
Bloomberg News was first to report Shopify’s potential deal with Deliverr.
In January, Shopify cut several warehouses from its network, which the company had been working on since the start of the COVID-19 pandemic. At an earnings call in February, Shopify’s chief financial officer, Amy Shapero, said the changes are a way for the company to use more of its own warehouses instead of the independent ones it had been partnering with.
Some analysts believed at the time this was a move by the Ottawa company to walk away from any challenge to Amazon.
However, Thursday’s announcement from Amazon and Shopify’s intention to acquire Deliverr together signal that both companies plan to compete directly in terms of fulfilment networks and point-of-sale systems.
Shopify is investing US$2-billion until 2024 toward its fulfilment network, the company said during its last earnings call. As of February, US$117-million had already been spent from that initial investment, Ms. Shapero said.
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