Shopify's Hoping Its Fulfillment Strategy Is a Slingshot, Not Simply Another Option

Ultimately, if Deliverr is "just another 3PL/4PL", then Deliverr is a tremendous waste of money. There is enough fulfillment capacity chasing medium to high-volume Shopify businesses that it's unnecessary. An investment would have sufficed, similar to Shopify's well-tread VC approach in other eCommerce ecosystem segments.

If Shopify truly wanted to run a 3PL that caters to low-volume storefronts, it will end up wasting a lot of money, and ultimately end the experiment within 18 months.

The only logical explanation for Shopify's fulfillment experiment is about marketplaces as a consumer slingshot, and the clue is in two areas.

First, if you go back to history, Deliverr, while it was a great service what really put them on the map was their 2-day shipping deal with Walmart. Deliverr quite simply is the reliable delivery promise for Walmart's marketplace.

Second, the mention of Shop Promise in the press release.

So what is Shopify betting?

One, Walmart and other marketplaces will not be able to run a truly independent third-party fulfillment service. And every scaled marketplace needs a fulfillment service, and for any non-scaled one it's certainly useful. Expect Shopify to be successful setting up more marketplace partnerships with different retailers of all sizes.

Essentially, replicating what Deliverr already proved in the past, but extremely widely.

Two, up-and-coming marketplaces need Shopify more than Shopify needs them. Every marketplace needs Shopify merchants to populate its unique inventory. It is simply the largest source of brands outside of just calling on Amazon sellers. So Shopify will be in the room already.

This gives them leverage and an opening for Shop Promise.

Shop Promise is the same Trojan Horse that Amazon is trying to establish in another realm with BuyWithPrime (skeptical of their success at the moment, but for another article).

Once Shop Promise is in the door, then Shopify will have a clearer path to a direct consumer relationship. Even then, it doesn't have to build its own marketplace, but it would certainly make it easier should it choose to do so.

Marketplaces need Shopify merchants, and reliable fulfillment. This will get Shopify in the door -- and that will be attached to Shop Promise. Once Shop Promise is in the door, Shopify will have an opening to a much deeper buyer relationship. I don't expect Shopify knows what the next step is after that, but once it gets to this point, it will have a better field of view on next steps.

Either way, if you're Amazon, this narrative doesn't give you a lot of confidence. And if you're Shopify, this sounds like a lot of green field to me. Sure they could fail.... but even in failing they may continue to gain ground and continue to diversify their revenue streams away from just their platform.

Which ironically, sounds like an Amazon playbook ;-)