Shopify tumbles on a report of it terminating fulfillment contracts
BNN Bloomberg
Shopify plunged by the most since March 2020 after a report that the Canadian e-commerce company terminated contracts with several warehouse and fulfillment partners.
Shopify Inc. plunged by the most since March 2020 after a report that the Canadian e-commerce company terminated contracts with several warehouse and fulfillment partners.
Its U.S.-traded shares closed down 14 per cent on Friday to the lowest level since September 2020 on high trading volume after the business publication Insider said Shopify was expected to have about half of its previous capacity for e-commerce orders for merchants, once changes are implemented. The report cited executives at four fulfillment companies in Shopify’s network.
Baird analyst Colin Sebastian said that, if true, the timing makes sense for Shopify to grow its own distribution warehouses instead of relying on third parties.
“As they reach a ‘fork in the road,’ the timing seems right for Shopify to alter course in fulfillment, the question being in which direction do they turn,” Sebastian said in a note to clients.
“In the evolving e-commerce landscape, it’s pretty clear that fulfillment and delivery need to be core competencies, and for Shopify, the sweet spot of an ‘asset light’ hybrid approach has proven to be a challenge to scale,” he said.
