Shopify announces plans to bolster its warehouse and delivery network

Shopify has done almost the impossible for global e-commerce giant Amazon.com Inc. By providing a platform for merchants, brands and traditional retailers to bring their stores into the internet age, the Canadian e-commerce upstart has found a way to compete.

But its earnings call on Wednesday came with a forecast of slowing growth, accelerating its stock’s recent plunge.To revive the platform, President Harley Finkelstein laid out a plan: Shopify must Amazonize its business.

Amazon’s order fulfillment and delivery network is unmatched , with 172 million Prime members paying for priority shipping, and the company offering same-day delivery to more than 90 metro markets. In fact, Amazon’s core e-commerce business is so strong that activist investor Daniel Loeb, whose hedge fund Third Point has a large investment in the company, says it should be worth $1 trillion on its own.

To catch up, Finkelstein unveiled plans to heavily support the Shopify Fulfillment Network. If all goes according to plan, the company will significantly increase its role in storing and shipping merchant customers’ products — and hopefully reverse its recent stock price decline:

Shopify plans to spend $1 billion over two years starting in 2023 to significantly increase the number of company-owned warehouses; the ultimate goal is to provide two-day or less delivery services to more than 90% of the U.S. population.

Shopify's stock has fallen 26% since Wednesday's call and has been falling rapidly since peaking at $1,690 in late November; it currently trades at just $660.

David vs. Goliath: A $1 billion investment is a huge turnaround for Shopify, dwarfing its average investment over the past three years by 10 times. But it's easy enough for Amazon, which spends about that much in an average work week. To take out the e-commerce giant, Shopify may have to hope that one of its merchant customers sells a particularly powerful slingshot.

Shopify

Announces plans to strengthen its warehouse and delivery network