Digital-oriented freight forwarder Flexport has completed its acquisition of the logistics arm of Shopify Inc., one month after it announced its plans.
The deal includes Deliverr, the tech-enabled shipping services provider Shopify bought last year for $2.1 billion, and it officially puts Flexport into e-commerce fulfillment and last-mile delivery.
In exchange for its fulfillment assets, Shopify will receive a 13% equity stake in Flexport and a seat on the board, Flexport CEO Dave Clark previously told FreightWaves.
It is the first deal since Clark, who engineered the rollout of Amazon.com’s transportation and logistics network over a dozen years, joined Flexport eight months ago and became full-time CEO on March 1 with a mandate to sustainably scale the 10-year-old business. It positions Flexport to compete with Amazon on home delivery with a more holistic port-to-porch logistics system designed for small and medium-size merchants.
Clark celebrated the news on Tuesday, saying, “We expect to rapidly integrate the core assets of the acquisition into our operations, including 3 million square feet of warehouse space, to support merchants during the upcoming holiday season.”
Shopify (NYSE: SHOP), which enables merchants to build online storefronts and leverage other services, invested an undisclosed amount in Flexport last year as part of a nearly $1 billion funding raise that valued it at $8 billion. The two companies have worked closely together since then. In February, Flexport created a tool that helps sellers on the Shopify e-commerce platform manage and track inbound ocean shipments.
Flexport is essentially taking over the Deliverr team in the Shopify network. Deliverr’s nationwide fulfillment network, which has warehouses within 100 miles of half the U.S. population, gives sellers benefits like two-day shipping and easy returns. Co-founder and CEO Harish Abbott will continue to run Deliverr.
Flexport will also be the primary provider for Shopify’s Shop Promise feature that enables sellers to apply a badge to products that have been verified for fast delivery in five days or less.
While Flexport will integrate more deeply into Shopify, the last-mile logistics capabilities will be available to all customers in a single operating system where they can plan and coordinate supply chain activities from the manufacturing origin to final destination.
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