Shopify launched a fulfillment service for online sellers who host their ecommerce sites on its platform. Shopify broke the news during its Investor Day this week where it made a number of other announcements, including new ways for merchants to reach international shoppers, and new shipping features, such as the ability to set shipping rules for different products.
Unlike Amazon, which built its own fulfillment infrastructure through Fulfillment by Amazon, Shopify is working with third-parties – just as eBay is doing with its nascent fulfillment service called Fulfillment for eBay.
Shopify is working with vetted fulfillment and software partners in Nevada, California, Texas, Georgia, New Jersey, Ohio, and Pennsylvania in order to “enable inexpensive and fast shipping for our merchants,” a spokesperson told EcommerceBytes.
Pricing is opaque at least for now, “based on the individual fulfillment needs” and factoring in distance, types of inventory and location. Shopify indicates that by baking in optimization using sophisticated technology, merchants will see benefits. “With our machine learning technologies, we are able to make intelligent demand forecasting, inventory allocation and order routing to mitigate any sitting inventory.”
When pressed about whether the pricing is competitive with other fulfillment services – specifically with Amazon FBA, she said, “Since fees are customized, we can’t comment on competitiveness compared to other fulfillment services. The product was designed to offer fast and inexpensive shipping that will benefit our merchants, and that’s always going to be a priority for us at Shopify.”
That promise of inventory optimization mentioned earlier is an important value proposition as any Amazon FBA merchant understands. Having inventory lingering on warehouse shelves unsold is costly. The company explained in its announcement:
“Our smart inventory-allocation technology, powered by machine learning, predicts the closest fulfillment centers and optimal inventory quantities per location to ensure fast, low-cost delivery. After your customer completes checkout, Shopify Fulfillment Network takes care of everything else, while putting your brand and customer experience front and center.”
The company is allowing US merchants who meet certain criteria to apply for early access to Shopify Fulfillment Network, pitching it as offering “timely deliveries, and lower shipping costs, for a superb customer experience.”
The ultimate goal is to offer Shopify Fulfillment Network to Shopify merchants of all sizes. “At launch, we’ll be offering our services primarily to small and medium sized businesses who are currently using a third-party logistics provider that are unable to fully meet their needs, in addition to merchants who have outgrown their existing self fulfillment processes,” according to the spokesperson.
Sellers will be interested to learn the Shopify Fulfillment Network supports the following functionality:
- Multiple channels (online store, retail, Instagram, eBay, Amazon, etc.)
- Returns and exchanges
- Custom packaging, kitting
- Works for merchants shipping 10 to 30,000 products a day
You can read more about this week’s Shopify announcements on the Shopify blog.
Shopify is claiming that they are going to take on Amazon, but they’re missing one critical thing: a marketplace. I’m wondering if they’re going to offer an umbrella site for they 800,000 merchants to opt into along with the fulfillment. A European fulfillment center wold actually be really helpful as $15 USPS minimum for the first 8oz is a deal killer for a small goods business delivering overseas.