The e-commerce giant had already lost well over
By mid-afternoon, the losses had eased to around 14 per cent, or
Shopify is pinning much of its hopes for a turnaround on Deliverr, which it bought to help deepen its inventory capabilities, broaden its storage and freight services and gain access to a new set of warehouses and couriers.
Deliverr, along with other automation and logistics technology, will be used to build out a network of both Shopify-owned and third-party warehouses that can deliver packages in two days or less to more than 90 per cent of the
"This is complicated stuff and this is stuff that is not easy to do, but that is sort of where Shopify shines," Finkelstein said, on a call with analysts.
"The goal is to make fulfilment something that our merchants, particularly in the
Shopify spokesperson
Shopify will pay about 80 per cent of the purchase price in cash and 20 per cent in shares for the
Delivery and logistics have become increasingly important aspects of Shopify's business since the company announced it would build a network of fulfilment centres in the
The network, which includes a self-operated and leased warehouse in
However, the move placed Shopify more directly in competition with
Keeping up has proven difficult for Shopify, which has disappointed investors in recent months.
The company, which keeps its books in
The result compared with a profit of
On an adjusted basis, Shopify says it earned
Analysts on average had expected an adjusted profit of
Shopify is positioning the fulfilment network as an answer to its earnings woes, but the venture will be costly. Achieving two-day delivery will mean Shopify will need many warehouses in proximity at a time when such spaces are in high demand and often selling for a premium. The company will also have to contend with worker shortages and staff who are demanding increasing wages and more benefits.
"It takes a lot of footprint and a lot of manpower," said
"Shopify is taking this on knowing it is not an easy task, but if you have capital and good management and good plans, you can do it. It never was easy, but it's harder today."
Also making it so difficult is
"It is totally doable but you need to be as aggressive as
When Shopify announced its fulfilment venture in mid-2019, it intended to spend about
Shopify has so far spent
She anticipates Shopify will ramp up its fulfilment-related capital expenditures in 2022, with self-operated, leased warehouses in key
"While this requires higher upfront spend, it pays back through operating efficiencies over time and allows us to achieve our desired margin profile more effectively than solely via partners," she said.
She envisions Shopify offering one-day delivery coverage in the
This report by
Companies in this story: (TSX:SHOP)
© 2022 The Canadian Press. All rights reserved., source