Briefing

Shopify acquires warehouse tech startup 6 River Systems for US$450 million

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The Waltham, Mass.-based firm makes robots and artificial intelligence software for fulfillment centres. Shopify will pay 40 per cent of the purchase price in stock, including US$69 million for 6 River’s founders and employees. The companies expect the deal to close in the fourth quarter. (The Logic)

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Talking point: The acquisition is Shopify’s largest ever, and 6 River could eventually help its new parent’s bottom line more directly than most of its previous purchases. Shopify has tended to buy startups as a way of recruiting their staff (Jet Cooper, Boltmade), or to add functionality like dropshipping (Oberlo) and automated refunds (Return Magic) to its platform. The e-commerce giant plans to use 6 River’s technology in its Shopify Fulfillment Network, an in-development system of warehouses and software tools for merchants shipping to U.S. customers. The deal is part of Shopify’s plan to speed up spending on its fulfillment network. It has budgeted US$1 billion over the next five years, and early interest in the offering was “much stronger than anticipated,” CFO Amy Shapero said in August. The new subsidiary could also provide a separate revenue stream. 6 River currently works with major retailers and logistics companies like Sport Chek and DHL, and its new parent said the company will continue to sell to businesses that are not Shopify customers. Shopify said it doesn’t expect the deal to materially impact its revenue in 2019, but that 6 River is projected to have US$30 million in annual billings in 2020.