Shopify Introduces Own Fulfillment Network
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Today at Shopify Unite, Shopify's annual partner and developer conference, Shopify announced a slew of new enhancements, including a Shopify-owned fulfillment network that goes after Amazon's well entrenched Fulfillment By Amazon.
Shopify is opening up their fulfillment network today to qualifying merchants operating on their platform. Qualifying merchants are assessed on a case-by-case basis by Shopify personnel who they believe best fit the criteria required by the AI-driven fulfillment network. Shopify states that "The goal is to offer Shopify Fulfillment Network to Shopify merchants of all sizes" but "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 fulfillment processes."
Currently, Shopify has fulfillment centers in California, Georgia, New Jersey, Nevada, Ohio, Pennsylvania, and Texas and support merchants who fulfill between 10 and 10,000 packages per day. Shopify's ultimate goal is to be able support between 3 and 30,000 packages per day.
Shopify is claiming that their fulfillment network will enable merchants to effectively offer reliable 2-day shipping to merchant customers. They are able to do this through Shopify's trove of customer and merchant data that enable machine learning algorithm's to best predict inventory placement from merchants historical customer purchase data.
Our machine learning capabilities predict demand, inventory allocation, and route orders to the closest fulfillment center. Inputs include the locations of our merchants, product details, consumer locations, and shopping behavior.
With this announcement, Shopify wants to eventually make fulfillment systems accessible to every merchant regardless of size. With Shopify taking on the often tedious and time-consuming task of order fulfillment, they are freeing up their merchants to focus on other aspects of their business that will enable them to grow revenue more effectively, which will not only grow merchant revenue, but also Shopify revenue.
It will be interesting to see how this product evolves over the next months and years.
