Shopify Downsizes by 20% and Sells Fulfillment Unit

Shopify will be smaller by about 20% after today, according to founder and CEO Tobi Lütke, as the company lays off employees and announced the sale of its logistics business to Flexport, which is headed by the former head of Amazon operations Dave Clark.

The news came as Shopify announced first quarter earnings, announcing a 15% increase in GMV (Gross Merchandise Volume) year-over-year, and a 25% increase in total revenue. Shopify’s platform powers online sellers’ ecommerce websites (see “What Is Shopify and How Does It Work?“)

In a blog post on Thursday, Flexport’s Clark called the acquisition of Shopify Logistics’s assets, including Deliverr (which Shopify had purchased only one year ago), “the last piece of the puzzle that enables us to drive technology fueled solutions across the entire product life cycle from the manufacturer’s floor, across the oceans and skies, through ports and fulfillment, and, now, right into the hands of customers.”

Clark said Flexport would be the primary provider of Shop Promise for Shopify merchants, “which enables transparent shipping timelines to Shopify customers, including two-day and next-day delivery options.”

And, he explained: “These services will be powered by Flexport in the merchant-facing Shopify Fulfillment Network app, which provides merchants an integrated logistics experience through Shopify.”

In February, Flexport (a global freight forwarder and licensed customs broker) had launched an app that gave Shopify merchants access to Flexport’s Full-Container-Load (FCL) and Less-than-Container-Load (LCL) ocean freight services, as well as enhanced cargo protection (i.e. insurance) and customs clearance.

In announcing Shopify Q1 earnings, President Harley Finkelstein was quoted: “Shopify’s strong first quarter results demonstrate once again that we’re the go-to solution powering businesses of all sizes, on every surface where they sell. The changes we’re announcing today will ensure we keep pace with the high velocity of change before us, delivering the cutting-edge solutions our customers have come to expect from Shopify.”

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.