Shopify Inc. is in talks to acquire technology startup Deliverr. The plan is to help Canadian e-commerce company Shopify expand its delivery services.
According to Bloomberg, the deal costs San Francisco-based startup Deliverr at more than $2 billion. This was disclosed by a source familiar with the matter. They asked not to be named as the matter was not made public.
A final decision has yet to be made and discussions could fall apart, the people added. A Shopify representative declined to comment. A representative from Deliverr also did not immediately respond to a request for comment.
The Deliverr business itself has been a lot of traders at Amazon.com, eBay Inc. and other online marketplaces get products to consumers in two days or less, according to its website. Fast delivery has become a must for retailers as the fast-growing online shopping marketplace has become increasingly competitive during the pandemic.
Deliverr uses analysts to predict where people might be interested in buying art supplies, makeup, shampoo, and other items. It then uses that information to locate items in its warehouse network to achieve fast delivery.
If the talks are successful, it would be Shopify's biggest deal, according to data compiled by Bloomberg, and complement the company's subscription-based software that allows anyone to create an online store.
Bloomberg Intelligence Analyst Anurag Rana said the deal would be a small step in the right direction, especially as Amazon has for the past two years relied on its logistics network. "Unlike Amazon, Shopify doesn't have a large distribution center and relies on third-party companies to provide faster shipping to its merchants.
Led by CEO Tobi Lutke, Shopify has surged during the online shopping boom fueled by the coronavirus pandemic. As Covid concerns and restrictions have eased, its stock has fallen, along with shares of other companies such as Netflix Inc. which also grew rapidly during the lockdown.
But unfortunately Shopify shares fell 13% to $525 in New York trading on Wednesday (20/4) and have fallen 62% this year, with the Ottawa-based company worth around $66 billion.
According to a statement, in November, Deliverr raised US$250 million in a funding round led by Tiger Global at a US$2 billion valuation. Existing investors including 8VC, Activant, GLP, Brookfield Technology Partners and Coatue are also participating.
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