Ecommerce platform Shopify is acquiring 6 River Systems, which makes warehouse fulfillment solutions. The move makes sense for Shopify, which launched a network of fulfillment centers earlier this year.
Interestingly two of the founders of 6 River Systems had worked at Kiva Systems, which Amazon acquired in 2012.
Shopify will pay $450 million for the firm consisting of approximately 60% in cash and 40% in Shopify Class A Subordinate Voting Shares – details below.
Press release follows:
Shopify Inc., the leading multi-channel commerce platform, today announced that it has reached an agreement to acquire 6 River Systems, Inc., a leading provider of collaborative warehouse fulfillment solutions. In June, Shopify introduced the Shopify Fulfillment Network, a powerful and trusted fulfillment network that will ensure timely deliveries, lower shipping costs, and provide superb customer experience for merchants and their customers. This acquisition is a critical step to accelerate its growth, while 6 River Systems will also continue to build and sell their solution for warehouses.
With the acquisition of 6 River Systems, Shopify will add a team with decades of experience in fulfillment software and robotics, including experienced leaders from Kiva Systems (now Amazon Robotics). Adding 6 River Systems’ cloud-based software and collaborative mobile robots called “Chuck” to the Shopify Fulfillment Network will increase the speed and reliability of warehouse operations, by empowering on-site associates with daily tasks, including inventory replenishment, picking, sorting and packing.
“Shopify is taking on fulfillment the same way we’ve approached other commerce challenges, by bringing together the best technology to help everyone compete,” said Tobi Lütke, CEO of Shopify. “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world.”
“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.
Terms and Financial Impact
Under the terms of the agreement, which has been approved by 6 River Systems’ stockholders, Shopify will acquire all of 6 River Systems’ outstanding securities in a transaction valued at approximately USD$450 million, consisting of approximately 60% in cash and 40% in Shopify Class A Subordinate Voting Shares. Included in this amount are Shopify Class A shares and options valued at approximately $69 million that will be issued to 6 River Systems’ founders and employees that will vest subject to certain conditions and will be treated as stock-based compensation. Subject to various closing conditions, the acquisition is expected to close in the fourth quarter of 2019.
The transaction is expected to have no material impact to Shopify’s revenue in 2019. The transaction is expected to increase Shopify’s 2019 expenses by approximately $25 million, including $10 million in operating expenses; $8 million in amortization of intangibles resulting from purchase accounting; and $7 million in stock-based compensation. 6 River Systems is expected to generate annual billings of approximately $30 million in 2020, with associated revenue recognized over the multi-year lifetime of each contract.
About Shopify
Shopify is the leading multi-channel commerce platform. Merchants use Shopify to design, set up, and manage their stores across multiple sales channels, including mobile, web, social media, marketplaces, brick-and-mortar locations, and pop-up shops. The platform also provides merchants with a powerful back-office and a single view of their business, from payments to shipping. The Shopify platform was engineered for reliability and scale, making enterprise-level technology available to businesses of all sizes. Headquartered in Ottawa, Canada, Shopify currently powers over 800,000 businesses in approximately 175 countries and is trusted by brands such as Unilever, Kylie Cosmetics, Allbirds, MVMT, and many more.
About 6 River Systems
6 River Systems was founded in Waltham, Mass. in 2015 by Jerome Dubois, Rylan Hamilton and Chris Cacioppo. Dubois and Hamilton were previously executives at Kiva Systems (now Amazon Robotics). The 6 River Systems solution is operating in more than 20 facilities in the U.S., Canada and Europe, fulfilling millions of units each week for companies including Lockheed Martin, CSAT Solutions, ACT Fulfillment, DHL, XPO Logistics, and Office Depot.
SOURCE: Shopify Press Release
Shopify is indeed going big with its recent set of agreements. This means it is now a direct competitor of Amazon. And there is an eerie similarity as both Amazon and Shopify are striving on operational and technological upgrades. However, then a question pops up : What about other carriers like UPS, USPS, Canada post who currently have similar solutions. For example, UPS has a network of access points throughout the world. In such an open competition will these carriers stick with Shopify in collaborating and providing shipping to eCommerce store owners?