"Shopify Inc. is launching a network of warehouses to centralize delivery and lower shipping costs for its merchant clients.
In the past several years, Shopify executives have been trying to build out the company beyond just a retail platform that provides e-commerce payment tools to become a one-stop shop for retail entrepreneurship with global reach. The new Shopify Fulfillment Network is the latest in its expanded suite of offerings for merchants, which includes shipping and cash advances. While rarely naming names, Shopify executives have taken to framing the company as the savior of global entrepreneurship in the face of monolithic retail giants such as Amazon.com Inc. and Walmart Inc. grow ever-larger."
I suspect they’re late to the game. Amazon does this, and does it well. Amazon created their warehouses with humans working there, but conditions inside fulfillment centers aren’t great, so Amazon is automating those warehouses with robots - they’ve purchased Kiva, Canvas Technology, and Dispatch Systems to replace humans.
One analysis of the Kiva purchase said,
“The deal secured Amazon an army of robots custom-made to zip through warehouses, fulfilling shipment requests at a dizzying pace. By the time Amazon fully implemented the use of Kiva robots in 2014, the company had cut the so-called “click to ship” cycle down from the 60 to 75 minutes humans required to just 15 minutes, according to a Deutsche Bank note published that year. It also saved the company 20% on operating costs.”
Shopify is going the same route, and they’ll be 20 years behind Amazon. Maybe they can start with robots and avoid the messiness of humans.
Shopify is going the same route, and they’ll be 20 years behind Amazon.
They are certainly behind…but 20 years would put them at implementing by 2034.
That makes no sense.
The first mover to pioneer a disruptive technology, like Amazon has, will usually spend a lot more than the followers. There are numerous robotic companies now; also there much more advanced and cheaper computer vision and AI technologies available today than when Amazon began this.
It is unclear, to me, if this is good or bad for SHOP (the stock). It is most likely good for Shopify. But building and operating warehouses (even with robots) is a big expense and low margin compared to a pure Saas model.
Re: 20 years - Amazon has it figured out, and they’ll spend less time and money to ship something. They have a lot of really bright people thinking about better ways to do it. Shopify, or whoever does the fulfillment, won’t be nearly as efficient, or fast.
In the last 6 months, I have placed 51 orders with Amazon - and that doesn’t count a few my wife has placed, and a few to a different country. Probably 60 orders.
With Shopify’s merchants, it’s hard to tell, but I’d be surprised if it was 5.
Re: 20 years - Amazon has it figured out, and they’ll spend less time and money to ship something. They have a lot of really bright people thinking about better ways to do it. Shopify, or whoever does the fulfillment, won’t be nearly as efficient, or fast.
In the last 6 months, I have placed 51 orders with Amazon - and that doesn’t count a few my wife has placed, and a few to a different country. Probably 60 orders.
With Shopify’s merchants, it’s hard to tell, but I’d be surprised if it was 5.
But it doesn’t put them 20 years behind, once one has done it then it is much easier for others to replicate it. One thing Tobi hates is inefficiency and any repetitive tasks needs to be automated. Amazon seems to be wanting to compete more with their customers, both in AWS as well as in their store front. This will give an alternative to those that use Amazon Fulfillment but wanting to move away