business news in context, analysis with attitude

The Information reports that Shopify plans to "lay off 20% of employees and would sell its logistics business to Flexport, as the e-commerce company pushes to cut costs further and refocus on its core business."

The moves come as the company said that its Q1 revenue increased 25% to $1.5 billion, compared to the same period a year ago.  

However, The Information writes, the decision to sell the logistics business to Flexport is "a major blow to the Canadian e-commerce company’s ambitions to compete more closely with Amazon."

Some context:

"The sale comes less than a year after Shopify paid $2.1 billion to acquire logistics startup Deliverr, mostly in cash. Shopify entered the logistics business in 2019 with the purchase of warehouse automation and robotics startup 6 River Systems, which it will sell to Ocado, an automated grocery fulfillment company in the U.K.

"As part of the deal, Shopify will take an approximately 13% stake in Flexport and take a seat on the company’s board. The acquisition places Flexport, which is headed by former Amazon executive Dave Clark, in more direct competition with Amazon to deliver packages to shoppers’ doors. Prior to the acquisition, Flexport had mainly focused on other parts of the supply chain like cargo and ocean shipping."  The deal means that Flexport will take over some 50 warehouses and package sortation centers nationwide. 

The Wall Street Journal writes that Clark "came to Flexport last year after a long tenure building Amazon’s massive logistics network."

“It’s like going back in time to the early days of Amazon,” Clark tells the Journal. “When I started at Amazon in 1999, we had just opened our fourth or fifth warehouse. So Flexport is going to start with its 50 really small ones and three big ones here in another month or two, and it sort of feels like we’re starting the journey again, just in a different way.”