Shopify invests in San Francisco-based logistics giant Flexport

Shopify sign
Shopify sign

Shopify is ramping up its bid to become a global player in the fast-growing logistics industry, joining other investors in a US$935-million round of capital aimed at scaling up global digital freight-forwarding and package-tracking company Flexport.

Flexport announced Monday that Shopify is a “strategic investor” in the new raise, which was led by U.S. firms Andreessen Horowitz and MSD Partners.

The San Francisco-based company said it will use the fresh funding to beef up development of its logistics platform, which is now used by customers in more than 100 countries. Flexport’s software is designed to optimize customers’ supply chains, automating the shipping process in an effort to save time and money getting merchandise from factories to stores.

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Calling logistics “one of the most daunting complexities in commerce today,” Shopify director of production acceleration Bram Sugarman said Flexport is alleviating a critical pain point for online merchants who need to ship goods around the world.

“We are so inspired by the progress Flexport has made in this critical area and are excited to support them in their ambitious mission to modernize the supply chain, breaking down barriers to trade for businesses everywhere,” Sugarman said in a statement.

The Flexport investment is Shopify’s latest move to make a splash in the logistics and fulfilment space.

In the fall of 2019, the Ottawa-based e-commerce powerhouse agreed to buy 6 River Systems, a Massachusetts-based fulfilment solutions company, in a cash-and-share deal worth US$450 million. 

The deal gave Shopify ownership of fulfilment software and technology such as mobile robots that allow goods to be shipped more quickly and efficiently from warehouses.

Shopify, which makes software that helps merchants set up online stores and process payments, said in mid-2019 it planned to spend up to $1 billion over the next several years to set up a network of third-party warehouses across the United States in an effort to help its partners lower their shipping costs and speed up delivery times to customers.

The investment comes amid a slide that’s seen Shopify’s share price on the Toronto Stock Exchange fall from more than $2,000 in mid-November to less than $1,100 on Monday afternoon.

The firm’s stock has plummeted more than 40 per cent in the past six months as Shopify officials warned that the “extreme levels” of online shopping earlier in the pandemic would likely level off as more consumers reverted to in-person shopping and COVID-related restrictions eased.

In addition, an analyst told the Canadian Press last month that the prospect of looming interest rate hikes is having a negative impact on technology stocks that have thrived amid low rates, including Shopify.

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