Shopify Acquiring Deliverr Would Kickstart Its Supply Chain Marketplace Vision

I think Shopify and Fulfillment have a number of problems that people don't realize which are different than the typical 3PL business:

- Entrepreneurs don't have a large volume of goods, so you are selling essentially odd lots of inventory. "Give me wide and shallow inventory", said no 3PL ever. It's one of the harder challenges in fulfillment. Most 3PLs would tell you it's not worth solving.

- Entrepreneur's inventory is not moving. Shopify doesn't advertise for you, and most entrepreneurs don't understand digital marketing at scale. Even if they do, these are new businesses and it takes years to build up any kind of steady volume.

- 3PLs make money only when you ship.

This is why 3PLs charge you for storage (to limit or keep slow movers out), and have minimum volume requirements (to make it worth their time to onboard and manage you).

Simply put, Shopify has different needs than the average shipper, and the market is not going to solve this problem for them. The choices are buy or build. Partner would work only for the "cream" (let's use Shopify Plus as a proxy for this).

Let's look at the assets Shopify would be gaining with someone like a Deliverr.

- Experience with "intake" and processing. Deliverr has sort center partners and FTL/LTL partners in its network These capabilities are needed to process inventory relatively close to the merchant.

- Experience with placement. Deliverr helps merchants decide where to put items.

- An existing network. Deliverr already partners with 80+ facilities.

- Existing fulfillment standards for network partners. Shopify doesn't have to invent its own fulfillment standards.

But Shopify will be doing more than this. For this to work, Deliverr pricing will have to come down and they may have to relax their minimums. Because it needs to work for entrepreneurs too.

I firmly believe that this is simply one piece of the puzzle that Shopify is putting together here. Who is architecting the vision is still a question I have, but it does appear that this is a big part of the vision, and quite an essential puzzle piece. Perhaps that's what Harish Abbott will do ;-).

A big chunk of Shopify stock never hurt no one.

I think post-acquisition Deliverr will be greatly expanding its network to cover all the edge cases, product types, and volume profiles that Shopify will need to run this well.

This is where the real work begin.