Is Shopify serious about fulfillment?
Shopify Fulfillment Network has never gained serious traction since its launch in 2019 and it appears to me that the company is at a crossroads with its approach.
There have been reports of management and strategic turnover at the company, leading to confusion by merchants and partners trying to make sense of what Shopify is doing. One year in, the acquisition of 6 River Systems, provider of robotic warehouse fulfillment solutions, was touted by Thomas Epting, director of Shopify Fulfillment Network, as being central to its strategy, but now he is no longer with the company. While there have been reports Shopify is reducing its reliance on third-party facilities, Shopify has also said it wants to focus on “two-day delivery.” It’s not clear which of these strategies is the new priority.
Shopify is unique in the e-commerce platform space compared with its competitors like WooCommerce, Magento, BigCommerce, etc., which do not have formal fulfillment offerings. Unfortunately, unique doesn’t always mean great. The service has not scaled, and stakeholders deserve an explanation.
Over the past few years, observers have noticed a few things:
- Shopify does not have a chief supply chain officer to guide the program at the senior level. Given that supply chain investments usually measure in the billions of dollars, Shopify needs a senior leader on the program, and the lack of it is not a great sign for the initiative. What’s more, Shopify does not even have a “supply chain” category on its jobs site. To a casual observer, this could indicate the company is not taking the project seriously enough.
- Shopify bought a robotics firm, 6 River Systems, but it’s unclear how this asset has been uniquely put to good use. It’s expensive to buy another company and not leverage it properly, particularly after it was launched with a lot of fanfare. It’s not clear what part of 6 River Systems Shopify valued most: the AI-based approach, its robots or its warehouse facilities.
These are just some of the questions and issues with Shopify’s approach. Of course, Shopify should be commended for thinking outside of the box, but after two years and multiple shifts, industry observers start to wonder — is there a clear strategic plan in place?
- Shopify to Acquire 6 River Systems – Shopify
- Shopify Enjoying Early Success With Its Fulfillment Business – The Motley Fool
- Shopify is cutting contracts with warehouses across the US, marking a shift in its push to challenge Amazon’s massive fulfillment machine – Business Insider
- Shopify Fulfillment Network to Cut Number of Locations – Cahoot
DISCUSSION QUESTIONS: Do you agree with Shopify’s strategy to offer its customers fulfillment services? What do you think Shopify needs to do to be successful?