Side quests
Shopify revealed yesterday that it is selling its logistics business to Flexport and laying off 20% of its workforce, as the online shopping giant essentially gives up on doing the actual delivering itself for its e-commerce customers.
The announcement came alongside the company's quarterly results, which saw a 25% increase in sales to $1.5bn compared to the previous year, far exceeding expectations of $1.43bn.
Offloading its logistics business marks a significant reversal for Shopify, which only purchased last-mile delivery startup Deliverr a year ago for $2.1bn, its largest acquisition to date. The company's CEO, Tobias Lütke, emphasized that SHOP is refocusing on its main objective of "building incredible software for e-commerce," distinguishing between the company's "main quests" and "side quests”.
Had the Canadian e-commerce company just stuck with its original “main quest” — of providing a place for pretty much anyone to create their own online store front — then it would still be heavily reliant upon its monthly subscription payments. However, that division now typically accounts for less than a quarter of its business, with processing payment fees, marketing, up-front capital and, until recently, logistics making up the bulk of its sales.
Shopify's news is a good reminder that the business of moving stuff from one place to another is still really hard — particularly when your competition is Amazon.
