Shopify Adds to Its Anti-Amazon Arsenal

Shopify just plopped down $450 million to raise its logistics game as part of its push to not just be an Amazon alternative, but to take the eCommerce Megatron on directly.

Not too long ago, we were talking about Shopify being in a battle with Square and Squarespace to become a single source for presence, point of sale, and e-commerce for small businesses. While that competitive dynamic remains, Shopify’s recent moves make it clear that it has a much bigger fish to fry.

The acquisition of 6 River Systems is designed to strengthen Shopify’s fulfillment network. Massachusetts-based 6 River builds technology that automates warehouse operations.

Shopify launched its fulfillment network over the summer to provide an alternative to Amazon for smaller online sellers who want to take advantage of a fulfillment network while maintaining their own branding and relationship with customers. In other words, the network is built for those who don’t want to ship their products in Amazon-branded packaging.

“Shopify is taking on fulfillment the same way we’ve approached other commerce challenges, by bringing together the best technology to help everyone compete,” said Tobi Lütke, CEO of Shopify, in a statement. “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world.”

Shopify sees a few promising angles on the deal, as one executive close to the transaction shared with us in an email.

“We’re excited about this on many fronts – including the team,” the exec said.  “In addition, the cloud-based software and collaborative mobile robots (‘Chuck’) to the Shopify Fulfillment Network will increase the speed and reliability of warehouse operations, by empowering on-site associates with daily tasks, including inventory replenishment, picking, sorting and packing.”

Here is a video that tells you all about Chuck, in case you were curious.

The “team” the Shopify executive was referring to is 6 River co-founders Rylan Hamilton and Jerome Dubois. Both are veterans of Kiva Systems, which was acquired by Amazon for $775 million in cash in 2012 and led to what is now Amazon Robotics.

So basically, Shopify has acquired the services of the team that helped Amazon build its robotics capability.

We don’t know off hand how much if any of the 2012 money went into Hamilton’s and Dubois’s pockets. They both held senior management positions at Kiva. If they weren’t already rich from that deal, they certainly are now. The Shopify deal is structured as 60% cash and 40% Shopify stock, which has been on a tear this year.

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