Shopify narrowing its ambition, sells Deliverr, other pieces

NEW YORK (AP) — Shopify, the e-commerce company viewed as a growing competitor to Amazon, is selling the two biggest pieces of its fulfillment network and abandoning its logistics ambitions.

It's a remarkable reversal after the Canadian company's multiyear effort to build its own warehousing and delivery services. But investors welcomed the company's move to focus more on its retail business on Thursday by sending its stocks as high as 15% in premarket trading.

Shopify also said in its earnings report that it pulled in $1.5 billion in revenue for the first quarter, which outperformed Wall Street's expectations. It reported a profit when analysts had been expecting a loss.

Most of Shopify’s fulfillment assets will be acquired by logistics provider Flexport in an all-stock deal that also includes the sale of the shipping service company Deliverr, the company said Thursday. Shopify bought Deliverr just last year for $2.1 billion.

In exchange, Shopify will receive a stake of about 13% in Flexport, bringing its total ownership in the privately held company up to the high-teens, the company said. Flexport will become the official logistics partner for Shopify, which provides e-commerce tools for merchants. It will also acquire Shopify's warehouses.

On Thursday, the British grocery-tech company Ocado Group said it was buying another major part of the Shopify’s network - the warehouse automation firm 6 River Systems, or 6RS.

“This is about removing distractions,” said Rick Watson, CEO and Founder of RMW Commerce Consulting. “Long-term the right decision, but short-to-medium term it is raises many more questions about Shopify’s management team.”

Shopify's logistics network is comprised of Deliverr, 6RS and the SFN App, which allows merchant to track shipments.

The sell offs...