Ecommerce platform provider Shopify Inc. will acquire 6 River Systems Inc., a robotics warehouse fulfillment vendor, for $450 million, Shopify announced this week.
The vendor’s cloud-based software and mobile robots named “Chuck” will be added to Shopify’s Fulfillment Network and will help Shopify’s warehouse associates with daily tasks, including inventory replenishment, picking, sorting and packing. Shopify expects this to increase the speed and reliability of its warehouse operations and is a “critical step to accelerate its growth,” Shopify says.
In June, Shopify announced plans to spend $1 billion over the next five years to set up a network of fulfillment centers in the U.S. to help merchants using its ecommerce platform deliver products to shoppers more quickly and cheaply and to better compete with Amazon. A Shopify spokeswoman says the company has negotiated low rates with warehouses and shipping companies for its merchant customers.
The response has exceeded the vendor’s expectations, Shopify chief operating officer Amy Shapero said on Shopify’s second quarter earnings call on Aug. 1, noting that “thousands” of merchants have expressed their desire to be a part of Shopify’s early-access program.
The vendor works with more than 820,000 merchants in 175 countries, and the Shopify Fulfillment Network aims to provide the “best shipping and fulfillment rates” for its merchants, says a company spokeswoman. Within Internet Retailer’s Top 1000, 37 online retailers use Shopify as their ecommerce platform. It is ranked as the No. 5 vendor of ecommerce platforms in Internet Retailer’s forthcoming Leading Vendors report.
What’s more, preliminary results from Internet Retailer’s Ecommerce Technology Survey finds that Shopify is one the most-used ecommerce platforms, according to survey results from 130 retailers. Plus, of the 28.5% of retailers that said they were looking to switch ecommerce platforms, 23% plan to switch to Shopify, according to early survey results.
With the 6 River acquisition, Shopify gains important talent from the vendor, says Samad Samana, senior vice president at investment banking firm Jefferies Group LLC, as two of its executives have previously worked at Amazon.com Inc.
“The deal gives Shopify the ‘technical know-how’ as it adds intellectual property to its broader fulfillment ambitions,” says Brian Peterson, a vice president at investment banking firm Raymond James Financial.
6 River was founded by executives who came from Kiva Systems—now Amazon Robotics—and it operates in more than 20 facilities across the U.S., Canada and Europe. It fulfills orders for companies including Lockheed Martin Corp. and Office Depot Inc.
The deal, poised to close in the fourth quarter, is expected to increase Shopify’s expenses by about C$25 million ($19 million) in 2019, with no material impact on its revenue for the year.
Of the $460 million sales price, 60% of that is in cash and the rest in voting shares, according to a statement from both companies. Shopify fell as much as 4.9% in New York to the lowest in a month, extending the stock’s slump for a third day.
Katie Evans contributed to this article.Favorite