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Shopify is pursuing its expansion into Europe based on a new platform launched by fulfillment provider Shippo.
The e-commerce company is the launch customer for Shippo for Platforms, which offers “seamless integration of shipping functionality” with online sales on platforms like Shopify.
According to one report, the two have formed a multi-year partnership, “accelerated by a significant financial investment in Shippo’s business, product and carrier ecosystem.”
Rick Watson, founder and CEO of e-commerce consultancy RMW Commerce said, “Shopify is investing significantly to grow its European business, and shipping is a missing component.”
Recently, Shopify has taken steps to build its fulfillment capabilities that have relied on third-party and warehouse providers. Its recent revelation that it expects to spend $1 billion to build a network of distribution facilities across the U.S. to enable next-day or faster deliveries wasn’t well-received in financial markets, sending its stock down 16% . (see The loading star February 28th).
Mr Watson sees the alliance with Shippo as a win-win. Shippo is able to launch its new platform with a large customer covering a large and strong market, while Shopify has secured a shipping solution that allows its smaller merchants to adopt a shipping solution without any integration hassles.
Simon Kreutz, President and Co-Founder of Shippo, said, “Third-party apps are clunky and often result in a poor user experience, but the native integration of Shippo’s shipping capabilities directly into the Shopify platform helps their merchants take full advantage of Shippo while maintaining the seamless experience they’ve come to expect from Shopify,”
The delivery solutions provider uses a network of global and regional carriers with more than 85 players with pre-negotiated rates. For merchants, this provides a turnkey solution that allows them to quickly expand into new markets.
And a day after announcing the partnership with Shopify, Shippo unveiled new service agreements with seven carriers in Western Europe. These agreements, involving Colissimo, Correos, DPD DE, DPD UK, Hermes UK, Poste Italiane and Mondial Relay, offer customers service availability in France and Italy and extended service in the UK, Germany and Spain.
For Shippo, the Shopify partnership marks a win over rivals Stamps.com and Pitney Bowes, Mr Watson claimed. The agreement includes both tracking and label printing, and he called the label aspect the “crown jewel” of the business “because it’s the primary revenue stream for companies like Stamps, Pitney Bowes and Shippo.”
Shippo claims to be used by over 120,000 businesses. However, the new offering isn’t aimed at individual merchants, rather Shippo for Platforms targets online marketplaces, which can use it to onboard merchants, onboard couriers, buy labels, and provide merchants with a “native service” experience Offer.
With the partnership established in Europe, Mr. Watson may be eyeing expansion into North America. Shopify is aiming to build a network of US distribution centers to operate itself, but that doesn’t include last- and mid-mile transportation. Given investor reaction to those plans and a $1 billion price tag, working with a partner that taps into a massive network of carriers seems like an enticing strategy for Shopify.