default-output-block.skip-main
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Shopify Is Setting Up Fulfillment Network in US, Just Like Amazon

The online platform, which celebrity Kylie Jenner uses to sell cosmetics, is the top-performing stock in Canada this year.
Shopify | Source: Shutterstock
By
  • Bloomberg

NEW YORK, United States — Shopify Inc. plans to spend $1 billion to set up a network of fulfillment centers in the US to help merchants using its e-commerce platform deliver products more quickly and cheaply, much the way Amazon.com Inc. does.

“A large number of orders are lost in the final stages due to complex shipping costs,” Craig Miller, Shopify’s chief product officer, said at the company’s annual developer conference in Toronto. The service will use machine learning to predict demand and suggest closest fulfillment centers to merchants.

The Ottawa-based company unveiled the plan, along with new features such as video and 3D modeling for products, the ability edit orders and a better user interface. It also added 11 new language capabilities and rolled out a multi-currency payments system to all merchants. It’s planning a new point of sale system for later this year.

Its shares jumped 4% to a record $316.22 at 12:25 p.m. in New York.

Shopify processes millions of individual sales by hundreds of thousands of merchants every year. The company could potentially pool shipments from different online stores together, making shipping cheaper and more efficient. Storing products from different merchants in centralized warehouses would also bring down costs for sellers and buyers alike, and net Shopify another revenue stream.

That could help the company mount a defense against Amazon, which ruthlessly lowers prices and encourages merchants to use its own warehouses and shipping tools.

The online platform, which celebrity Kylie Jenner uses to sell cosmetics, is the top-performing stock in Canada this year. It’s also outperformed any stock in the S&P 500 over that time, other software services companies such as Square Inc. and Amazon.com Inc.

The company has been rallying after reporting strong first-quarter earnings, forecasts for second-quarter revenue that were above expectations and pushing plans to expand internationally. Shopify posted its first annual revenue above $1 billion in 2018. The company is rated a buy by 18 analysts, a hold by 8 and a sell by two, according to ratings compiled by Bloomberg.

But Facebook’s addition of features on its Instagram app that allows consumers to pay for items without leaving the social platform, could steal market share from Shopify, which currently provides that service.

Increasing competition has helped fuel short sellers such as Citron Research, which has also voiced concern in the past about Shopify’s merchant volume and churn among small sellers.

By Simran Jagdev and Paula Sambo with assistance from Gerrit De Vynck; Editors: Jillian Ward, Jacqueline Thorpe, Molly Schuetz

In This Article

© 2022 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from News & Analysis
Fashion News, Analysis and Business Intelligence from the leading digital authority on the global fashion industry.

The 10 themes in The State of Fashion 2023, the authoritative annual report from The Business of Fashion and McKinsey & Company, highlight how businesses can deploy realistic yet bold strategies to drive growth, even amid challenging times.




Tim Blanks sits down with Ziad Ahmed, chief executive of JUV Consulting and Stephanie Simon, the former head of community at Clubhouse to reflect on VOICES.


view more

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
How to Build a Profitable DTC Brand
© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions and Privacy policy.
How to Build a Profitable DTC Brand