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Shopify is enabling small retailers to compete with Amazon by providing the fulfillment network they need to do so. It’s difficult to understand why more firms haven’t done exactly what Shopify has with its fulfillment network. Firms like UPS and Fedex should have been all over this. Amazon doesn’t have any real competitive advantage if a firm can match them on delivery. They were the first mover, but that’s typically not durable. Jennifer Smith reports for The Wall Street Journal:
Shopify Inc.’s recent expansion into physical distribution is looking prescient, as surging digital sales during the coronavirus pandemic boost demand for the e-commerce technology company’s fulfillment services.
The Shopify Fulfillment Network that handles the storing, packing and shipping of goods for online sellers “enrolled more merchants and increased our fulfillment volume…by two-and-a-half times over Q1” in the second quarter, Thomas Epting, director of the network, told The Wall Street Journal. “We’re seeing good in-year growth and certainly ample demand.”
The expanded business for handling physical goods is part of the growing demand Shopify has seen for its main business providing the digital tools for retailers to reach consumers online.
That capability has become critically important for many merchants as the coronavirus pandemic has upended American life and the U.S. economy, triggering a rush of e-commerce orders from homebound shoppers and a scramble by smaller sellers to scale up to compete with online heavyweights such as Amazon.com Inc.
Covid-19 has pushed e-commerce “forward by 10 years,” Mr. Epting said. “We’re building SFN with the goal of having our merchants be as ready for the future of commerce as they can be.”
Shopify’s second-quarter revenue nearly doubled to $714.3 million from the previous year, and the number of new stores created on its platform jumped 71% from the first quarter of 2020 to the second quarter.
Ottawa-based Shopify launched its fulfillment service in June 2019 through partnerships with operators of seven warehouses around the U.S., aiming to speed delivery for small and medium-size brands. Shopify also bought warehouse robot-maker 6 River Systems Inc. for $450 million and began deploying the company’s robots in some partner warehouses to help workers fulfill orders.
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