Shopify acquired Amazon’s secret sauce

“In contrast to Amazon’s winner-takes-all approach to retail, Shopify is building an army.” – Digiday

Shopify is creating more business value for its partners than its capturing for itself.

For more than a decade, the company had focused on simplifying the online shopping experience.

They wanted to now take a step further – “making the fulfilment systems and technology that used to be reserved for the largest companies in the world accessible and affordable to every merchant, even those just starting to take off”, says Shopify.

Last year, Shopify introduced the Shopify Fulfillment Network to ensure timely deliveries, lower shipping costs and enhance the customer experience for both merchants & customers.

Unlike Amazon, Shopify wants to democratize the logistics model.

So how is Shopify gonna build something that Amazon took over a decade to establish?

By acquiring Amazon’s secret sauce.

History

In 2012, Amazon acquired Kiva Systems (now Amazon Robotics) that made autonomous robots to boost fulfillment in warehouses.

After the acquisition, the ecommerce giant did not renew Kiva’s previous contracts and used the acquired assets exclusively for Amazon’s warehouses.

“This acquisition radically changed how the e-commerce giant fulfils millions of orders and potentially saving the company, by some estimates, up to $2.5 billion.

By the time Amazon fully implemented the use of Kiva robots in 2014, the company had cut the so-called “click to ship” cycle down from the 60 to 75 minutes humans required to just 15 minutes. It also saved the company 20% on operating costs.” – Pitchbook

Shopify’s Acquisition of Warehouse Tech

In October last year, Shopify acquired 6 River Systems to help improve its own fulfilment network.

The origin of 6 River Systems is quite interesting.

Shopify not only added a team with decades of experience in fulfillment software and robotics, but also acquired experienced leaders (ex-execs) from Kiva Systems.

6 River’s website says that – “In 2011 Rylan Hamilton and Jerome Dubois met at Kiva Systems. Fast forward to 2015, Rylan is running Solutions at Amazon Robotics and Jerome is running strategic initiatives within Amazon’s Seller Services organization. During this time Chris Cacioppo was building interactive hardware and software solutions.

The team knew the benefits mobile robotics could bring to fulfillment but were also aware of the limitations of existing offerings. With e-commerce growth accelerating, technology advancing and customers demanding better service, the team saw the conditions for the “perfect storm.” So they decided to jump in.”

Now that Shopify has its hands on Amazon’s secret sauce, they’re better off scaling fast and going head-to-head with Amazon.

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