Shopify (NYSE: SHOP), which offers commerce platforms for both traditional and e-commerce retailers, will acquire 6 River Systems as a means to increase fulfillment efficiency in Shopify warehouses. The acquisition will take place in the final quarter of 2019. The Ottawa-based e-commerce giant is paying $450 million in cash and stock for the Massachusetts-based company that is backed by venture capital and specializes in fulfillment robotics and software.
6 River Systems is a warehouse management and automation company that utilizes mobile robots named "Chuck" to improve efficiency in warehouse operations.
The acquisition comes three months after Shopify announced its Shopify Fulfillment Network–a powerful effort to promise timely deliveries, excellent customer service, and low shipping costs. The main competition in this endeavor is Amazon FBA (Fulfillment by Amazon).
The acquisition should have no negative impact on Shopify's 2019 revenue, but will generate $25 million in additional expenses, including operations, accounting, and stock-based compensation.
Shopify was founded in 2004, went public in 2015, and now supports 800,000 business in 175 countries. Businesses use Shopify to establish their stores' online and/or brick and mortar presence, as well as support their payment and shipping processes. Because of Shopify's scalability, businesses of all sizes can use its platform for logistics and audience growth.
Shopify does for merchants what Amazon.com, Inc. (NASDAQ: AMZN) does for buyers. In the last year, Shopify's value has grown 180% to $45 billion. It has surpassed eBay's value, even though eBay Inc (NASDAQ: EBAY) still sells a higher volume of goods. Their merchants run from Penguin Books to Canadian marijuana growers to Kim Kardashian's beauty lines.
"By joining Shopify, we're changing the game of fulfillment. Together, we will help thousands of businesses improve their fulfillment operations, with an easy-to-learn solution that can more than double productivity and improve accuracy," said Jerome Dubois, co-CEO and co-founder of 6 River Systems, in a statement.
Now operating in more than 20 warehouses in North America and Europe, 6 River Systems was founded in 2015 in Waltham, Massachusetts. Two of the founders, Dubois and Rylan Hamilton, served as Kiva Systems executives. Kiva Systems later became Amazon Robotics.
"There is a growing trend for marketplaces like Shopify and eBay to leverage distribution center assets they build and lease as well as leverage third parties to provide facilities and fulfillment services," said e-commerce consultant Brittain Ladd. "The future of commerce is having the ability to forward deploy inventory as close to customers as possible. Why? Because the closer inventory is to customers the faster and cheaper it is to fulfill orders and deliver the products. This means that supply chains have to evolve from massive distribution centers to more of a hub-spoke-delivery station model."
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