As consumers continue to shift to digital shopping, a key stool in our Digital Lifestyle investing theme, we are not only seeing more companies embrace the direct to consumer (D2C) business model, but we are also seeing more digital shopping solutions for those companies come to market. Internet shopping platform company Shopify is doing just that as it expands its reach into our Digital Infrastructure investing theme by moving into distribution and fulfillment services. Interesting indeed, but what caught our eye is how they are using machine learning, an aspect of our Disruptive Innovators theme, to do so.
E-commerce technology company Shopify Inc. is extending into physical distribution, offering customers access to a network of dedicated U.S. fulfillment centers to store and ship consumer goods for online orders.
The aim is to speed up delivery for retailers racing to keep up with Amazon.com Inc. while keeping a lid on transport costs by placing inventory across a distributed network within easy reach of major population centers.
Ottawa-based Shopify provides internet shopping platforms and other services that help companies sell items online. It has also branched into payment technology and hardware for use at retail stores and pop-up locations as more online businesses open bricks-and-mortar locations. Its customers include Unilever PLC, Kylie Cosmetics and footwear maker Allbirds Inc.Shopify said Wednesday that its new service uses machine learning to forecast demand, allocate inventory and route orders to the closest fulfillment centers. The company is working with logistics providers and software companies in Nevada, California, Texas, Georgia, New Jersey, Ohio and Pennsylvania.
“Our aim is to make fast and inexpensive shipping the new standard on the internet,” said Shopify Chief Product Officer Craig Miller.
Shopify’s move into warehousing services puts it in competition with companies such as Belgian Post Group-owned Radial, which provides technology and e-commerce services for retailers such as Dick’s Sporting Goods Inc. at 21 fulfillment centers.
The services are part of a growing array of operations that startups and traditional shipping companies have launched to compete with Amazon’s expanding distribution system, including a Fulfillment by Amazon business that ties its online marketplace for third-party sellers to its burgeoning network of distribution centers and transportation options.