Here's Why Shopify Doesn't Need To Acquire Stamps. Sorry Citron
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Citron Research - a known activist short-seller - said that Shopify should acquire Stamps, which includes namesake Stamps, ShipStation, Endicia, Shipworks, Metapack, etc.
First, you can already print shipping labels in Shopify. Two years ago, they even offered this capability via mobile.
Second, Shopify tends to white-label very large partner functionality rather than buy. Witness: taxes provided by Avalara. Payments provided by Stripe.
Shopify's last major fulfillment-related acquisition was related to AI and robotics, not printing labels.
The battleground used to be 3PLs (third-party logistics). Now the battleground is well beyond this - automated distributed, efficient, multi-location 3PLs that self-balance based on inventory forecasting and consumer service. Shopify is even partnering here to power their fulfillment solutions.
If I had to pick a market where Shopify would be wise to pull it in-house, it would be payments. There is always more margin closer to the money. Shipping labels are more or less rate arbitrage.
Shipping labels are not a next-generation function for a company like Shopify. It's the platform.
David McCary added a point in favor of the potential acquisition “additional leverage with the carriers…The Stamps family owns billions of dollars with of carrier contracts, that could potentially be leveraged by Shopify to try to move business (e.g. from USPS to FedEx) with the right carrier incentive.” This is a good point, their network of assets is pretty extensive, which would also - unfortunately - mean that Shopify is acquiring a lot of legacy. No disrespect to Stamps, but Shopify and legacy don't exactly mix. Matthew Holman adds “for a company controlling the amount of volume Shopify does, they could easily negotiate carrier contracts directly with the USPS, FedEx, etc. the big players in this space have been teaming up.” So no real need to acquire just to get in on making big carrier deals. Also, as Jason Greenwood points out, “carrier integrations are highly regionalized so who wants to maintain THAT in-house? Every major country has a good carrier integrator that already integrates with Shopify (eg Starshipit in NZ) so again - what’s the issue here?” Payments. The issue that kept coming up was payments.
There was a lot of chatter about Stripe powering Shopify’s payments, and whether there is more functionality available overtly vs. white-labeling (sort of an “it’s all Stripe under the hood” effect). I agree with Jared Kligerman here, when he said payments are “a key element to bring in-house if the success of Ant Financial/AliPay is any indication.” Mark Gray added “outside of payments Shopify would be best suited to also monetize currency conversion as a suite to allow their CBT sellers to scale with flexibility. An acquisition of say, OFX or Payoneer would do well for them keeping cash close to the chest.”
Interesting ideas all around, but not many folks seem terribly convinced that Stamps is the future here.
