The Canadian online shopping company has recently announced it plans to spend up to $1 billion according to Chief Product Officer, Craig Miller.
In order to keep up with other online shopping giants—most notable Amazon—Shopify executives believe they need to be able to offer two-day shipping to remain competitive.
In order to ensure they’ll be able to offer faster shipping options, Shopify intends to adopt a method similar to Amazon’s which will involve large fulfillment warehouses.
Making Business Accessible
According to Miller, Shopify intends to provide “warehouse systems, machine learning and other technologies” that have previously only been accessible to larger businesses with more financial means to smaller businesses at a more reasonable rate in order to give small businesses and startups and opportunity to thrive.
Miller also referenced a business owner’s desire to ensure their products arrive with packaging that has its own logo on it, rather than a third-party’s logo.
According to Miller, Shopify intends to early access to their new system to merchants and companies that ship between 10 and 10,000 product per day—meaning it will benefit a wide range of businesses.
The company’s goal is to ensure two-day shipping is available to 99 percent of the U.S. by the end of the year. Miller also indicated the company plans on acquiring and operating several warehouses themselves. However, he also said the company also plans to third-party companies to run warehouses and perform deliveries for them.
“We are a software company and that’s kind of what we do best, and we will partner and work with other people that have trucks and things like that, so that way we don’t have to worry about the world of trucking and all that,” he said.
The announcement comes as part of Shopify’s intention to make it clear they are interested in expanding beyond just an e-commerce website to a distributor that can compete for with the giants (such as Amazon).
They recently announced 100,000 of their 820,000 merchants are operating out of physical, brick and mortar locations.
“No one is integrating in-store POS with online stores the way Shopify is. Those two things are usually separate solutions,” Ygal Arounian, an analyst familiar with Shopify said regarding their recent announcements. “Same thing with fulfilment. No e-commerce platform—outside Amazon—is building a logistics operation. They are moving towards being a fully-fledged global retail solution,” he adds.
Despite the fact Miller notably refused to mention Amazon by name during their announcement about their new warehouse system, he claimed the company doesn’t consider themselves in direct competition with Amazon.
“I think we actually are inspired by Amazon. They offer two-day delivery for a lot of products, and we said, how can our merchants actually offer the same thing?” he said of a potential comparison between the two companies.
Miller acknowledged the fact that people will often compare the two companies, but he insisted they are simply trying to remain competitive in the market, and taking innovations other companies are making and putting their own unique spin on them.