More flexible than Amazon, Shopify wants to create an "asset-light" logistics model

It is learned that Shopify Chief Financial Officer Jeff Hoffmeister said at Morgan Stanley's Technology, Media and Telecom Conference last week that Shopify will continue to integrate Deliverr to build a more flexible and asset-light logistics network than Amazon.

According to Hoffmeister, integrating e-commerce fulfillment provider Deliverr will allow Shopify to remain asset-light while offering delivery services by using software and working with a network of partners including warehouses, carriers, and last-mile delivery providers.

Through the Deliverr software, Shopify is able to quickly predict demand and place inventory at the point closest to that demand. By doing so, Shopify can reduce the time it takes to deliver products to the end customer, thereby also reducing costs.

President Harley Finkelstein said that the logistics network Shopify is building is very different from the networks owned by other companies. He pointed out that Amazon operates a single network with millions of SKUs, while Shopify is building a "elastic warehouse capacity" through Deliverr, that is, building multiple separate small logistics networks for a small number of SKUs.

The report said that this enables Shopify to avoid the cost pressure and excess warehouse space problems that Amazon encountered when demand slowed after the epidemic, effectively improving cost-effectiveness.

While Amazon has a logistics network that is almost unrivaled in the e-commerce space, it has been struggling under the weight of fixed costs. Amazon rapidly expanded its distribution network during the e-commerce sales boom, but growth slowed in 2022, leading to excess warehouse capacity and inefficiencies.

Hoffmeister said Deliverr users currently make up a “very, very small” portion of Shopify’s overall merchant base, and the company aims to change that once the integration is complete, but it may be a while before that happens.

Editor✎ Ashley/

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