Will Deliverr help Shopify better compete with Amazon?

Discussion
Source: Shopify promotional video
May 26, 2022

Shopify is often seen as an alternative for independent sellers frustrated with Fulfillment by Amazon’s changing inventory rules and increasing seller costs. Will acquiring Deliverr help close the gap on fast fulfillment?

Deliverr’s technology integrates third-party sellers with major e-commerce sites including Amazon, eBay and Walmart and helps them move their products to consumers in one to two days. Using predictive analytics and machine learning, Deliverr’s software anticipates demand for products based on geography, among other variables. This helps to optimally “pre-position” inventory in its network of more than 80 leased warehouses, where third-party logistics partners pick, pack and deliver orders.

Combined with Shopify’s self-operated warehouse hubs, Deliverr’s technology will power Shop Promise, a new Shopify service that will provide its customers with two-day and next-day delivery as well as expanded options for storage, freight, inventory preparation and returns. Shopify’s fastest shipping option has been two days.

Shopify wrote in a blog entry, “This delivery promise extends beyond the online store across surfaces like Google, Facebook, Instagram and the Shop app, helping merchants improve trust and increase sales with billions of potential customers by meeting them where they like to shop. Most importantly, Shop Promise guarantees merchants what no other commerce platform can: full ownership of their brand, business intelligence, and customer data.”

The $2.1 billion combination, which is pending regulatory approval, also promises merchants a “one-stop shop for their logistics needs,” from initial receipt of inventory, to distribution and returns, as well as “simplified multichannel inventory management” with a single place for merchants to ship their inventory for different sales channels.

“Our goal is to not only level the playing field for independent businesses, but to tilt it in their favor — turning their size and agility into their superpower,” Shopify CEO Toby Lutke said in a statement.

News of the acquisition follow’s Amazon’s launch last month of Buy With Prime functionality, which allows retailers that sell on Amazon’s third-party marketplace to implement Amazon Prime on their own websites.

According to Shopify, Amazon leads U.S. e-commerce with 41.0 percent market share in 2021, followed by Shopify at 10.3 percent, and Walmart at 6.6 percent.

Shopify Reports First-Quarter 2022 Financial Results, Plans to Acquire Ecommerce Fulfillment Technology Provider Deliverr – Shopify

https://news.shopify.com/shopify-reports-first-quarter-2022-financial-results-plans-to-acquire-ecommerce-fulfillment-technology-provider-deliverr

DISCUSSION QUESTIONS: Does Deliverr potentially make Shopify a more serious competitor to Amazon relative to fulfillment and inventory management? What other steps or investments may be necessary for Shopify to gain ground on Amazon, particularly in the wake of Buy With Prime?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Adding this into the mix is a fabulous idea."
"The acquisition of Deliverr will definitely improve Shopify’s chances of competing with Amazon, however, Amazon’s Buy With Prime program is hard to beat."
"The other side of this is 'should' Shopify be in this space at all, but that question is for another day."

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8 Comments on "Will Deliverr help Shopify better compete with Amazon?"


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Rick Watson
BrainTrust
Deliverr will not make Shopify a serious competitor to Amazon. I really think that is the wrong frame. Amazon’s logistics are light-years ahead of Deliverr’s capabilities both in scale and scope of services. Shopify does not think in terms of “gaining ground on Amazon.” Instead, Shopify thinks about what problems merchants are having. It’s incredibly complex to source, land, store, and fulfill inventory nationwide. Shopify’s moves in fulfillment (not just Deliverr) are the beginning of Shopify’s journey to address this critical merchant need. Two-day delivery was Amazon’s promise 10 years ago. We aren’t talking anything remotely resembling parity here. If Deliverr is an “exclusive” provider integrated with Shopify, I think it is a bad strategy. Shop Promise needs to incorporate any merchant’s existing fulfillment solution that meets standards. That would be a big step. Also Shop Promise is not much more than a marketing slogan at this point. ShopRunner didn’t have much luck with this same idea and millions of dollars in marketing. The other side of this is “should” Shopify be in this space… Read more »
David Naumann
BrainTrust

The acquisition of Deliverr will definitely improve Shopify’s chances of competing with Amazon, however, Amazon’s Buy With Prime program is hard to beat. More competitive delivery times and lower selling fees will help Shopify attract and retain sellers, but they need to continue to find ways to speed delivery times while mananging costs.

Jeff Sward
BrainTrust

It’s not hard to find a story or an article on a DTC or e-commerce business that is struggling to make a profit. So it seems like operational efficiency quickly rises to the top of the list in making an e-commerce related business profitable. We are getting past the sexiness of growth and being reminded daily that profit has to enter the picture at some point. Operational collaboration and efficiency have to quickly partner with strong product in order to make the business sustainable.

Paula Rosenblum
BrainTrust

I think it does. I have seen businesses grow from zero to $400,000 in the first year using Shopify. Its fulfillment costs were killer, and the owner always bought too much inventory.

Adding this into the mix is a fabulous idea.

I’d like to see Shopify slip into stores as well. Perhaps it might partner with Microsoft to create a full all-channel experience. Despite the excitement every time Amazon opens a store in some category or other, I remain unconvinced that the company understands how to “do” stores. It’s deceptively tricky and, while you can buy the operations expertise (maybe), you can’t buy the subtleties of assortment, product placement and in-person customer service.

Cathy Hotka
BrainTrust

I agree completely with your analysis of Amazon’s stores. My Amazon Fresh is a disaster on so many levels — low inventory, slim assortments, and way too many associates clogging the aisles.

Most retailers don’t need all the services Amazon offers — Shopify with Deliverr may be the right approach for them.

Ricardo Belmar
BrainTrust
This is a smart move by Shopify and an operational boost to efficiency for merchants on their platform. One does have to ask, however, is it too little, too late to move the needle in competing with Amazon? This might have been more impactful two years ago at the start of the pandemic. That said, I don’t believe Shopify has to compete with Amazon head on in the logistics and fulfillment space – that’s a losing proposition given how far in front Amazon truly is compared to everyone else. Shopify is focused on providing value to their merchants that solve challenges they have today. To that end – Deliverr is good idea. I would recommend Shopify focus on finding ways to help their merchants better integrate their operations across all the channels they need to be on. And that includes finding ways to help them in physical stores. Stores are more than ever an important channel as we’re reminded every day about the lack of profitability of digital-only DTC brands. Overall, Deliverr is a good… Read more »
Kai Clarke
BrainTrust

Yes, yes, yes. Broadening Shopify’s reach with Deliverr is just a win/win for everyone in the face of the 800 pound Amazon gorilla who is omnipresent. Better competition means better performance, pricing and availability. The only real question is can Shopify use this to improve their profit picture?

Anil Patel
BrainTrust

Even though Shopify’s acquisition of Deliverr to enable same-day or two-day delivery seems incredibly promising, I am skeptical of the merger’s long-term growth potential:

  • The most important aspect of this strategy’s success is precisely pre-positioning inventory in the warehouse. Amazon has perfected this skill, but I don’t see a viable solution in Shopify’s plan.
  • Controlling the brand experience and customer data presents a rosy picture. However, in the absence of this data, how will Shopify handle order flow and apply machine learning and predictive analytics to determine warehouse locations in order to pre-position inventory?
wpDiscuz
Braintrust
"Adding this into the mix is a fabulous idea."
"The acquisition of Deliverr will definitely improve Shopify’s chances of competing with Amazon, however, Amazon’s Buy With Prime program is hard to beat."
"The other side of this is 'should' Shopify be in this space at all, but that question is for another day."

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