San Francisco-based Flexport is acquiring Shopify's logistics division in a push to expand into last-mile e-commerce delivery and fulfillment, the companies announced.
Shopify will take an additional 13% stake in Flexport, the company said in a press release announcing its quarterly earnings results on Thursday, and Flexport will become Shopify's shipping and logistics provider. The partnership is not exclusive.
The all-stock deal is expected to close by the end of June and comes as Shopify attempts to reduce spending. The Canadian e-commerce giant also announced on Thursday that it would be cutting 20% of its workforce.
Shopify previously invested in Flexport's Series E funding round last year, and the new deal brings the percentage of Shopify's total stake in Flexport into the "high-teens,” the company told CNBC. At its most recent valuation of $8 billion, Shopify's 13% stake in Flexport would be worth roughly $1 billion.
Flexport develops logistics software for global supply chain management and has been primarily focused on international freight and cargo shipments. Integrating Shopify's logistics division will give Flexport access to around 50 warehouses, primarily in the U.S., and allow the company to expand into last-mile e-commerce and fulfillment services for the first time.
As part of the deal, Flexport is also acquiring San Francisco-based fulfillment provider Deliverr, which Shopify bought for $2.1 billion a year ago and is likely taking a loss on.
"Historically, we've focused on international freight movement, and with the acquisition of Shopify Logistics and Deliverr, we're now able to extend from not just manufacturing floor to port, but through e-commerce fulfillment all the way to last-mile delivery to handoff to customers or to the retail store," Flexport's Senior Vice President of SMB Product & Technology Parisa Sadrzadeh told me. "This truly is the last puzzle piece of the supply chain for us to build that end-to-end optimization."
Deliverr was founded in 2017 by CEO Harish Abbott and Michael Krakaris. Abbott will join Flexport and report directly to Flexport CEO Dave Clark, the company said in a blog post.
Clark joined Flexport in September to take over as chief executive after spending more than two decades at Amazon, most recently as the tech giant's head of worldwide consumer operations.
Former CEO Ryan Peterson co-founded Flexport in 2013. The company has raised $2.5 billion, including $250 million in debt, according to PitchBook. It was valued at $8 billion in 2022.
Flexport has more than 2,500 employees across Asia, North America and Europe, and the company says it handled more than $26 billion worth of goods in 2022.
