Amazon has become a dominant force in online retail, known for helping small businesses deliver their products to customers quickly. Today though, Amazon isn’t the only company offering fast shipping services for small companies. Shopify is targetting one of Amazon’s most notable advantages. Simran Jagdev reports for Bloomberg:
Same-day shipping is becoming the norm for online shoppers but for smaller merchants it can be a logistical nightmare. That’s where Shopify Inc.can step in, says Ric Kostick, chief executive officer of 100% PURE.
The natural skincare company ships up to 5,000 orders a day from its own warehouse in San Jose, California. That works fine for customers on the West Coast but it can take up to a week to get its bamboo blur powder and coconut shower gel to the rest of the U.S. The company contemplated setting up an East Coast warehouse but the prospect was technically daunting.
“The hardest thing is programming the technology to route the packages the right way and route the orders based on what a customer orders and what inventory is available at each site. Shopify has built the technology to calculate this,” says Kostick, who co-founded 100% PURE in 2004. “This is something I’ve wanted for years.”
When Shopify said last month that it was moving into the fulfillment business — essentially charging online merchants to store and ship their products — the shares spiked and analysts began talking about the Canadian upstart as a potential competitor to Amazon.com Inc.
It’s unlikely to become a serious threat to Amazon at this point. But many analysts believe the Ottawa-based company’s decision to add logistics to its range of online services is smart because it could help keep customers loyal, fend off competition and create an additional source of revenue. The move also could potentially pry small merchants from Amazon, which is focusing more on mega brands like Procter & Gamble Co.
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Jeremy Jones, CFA
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