Dive Brief:
- Shopify is offering discounts for its merchants to fulfill and ship orders through Flexport as the two companies deepen their logistics ties, according to recent announcements.
- One perk is 10% off Flexport's fulfillment services for first-time users for up to $1 million in savings. Another offers merchants 10% savings on shipping fees — up to $250,000 — for any shipment upgraded to Flexport's "Flexpedited" service. Both discounts apply to inventory inbounded and fulfilled by June 30.
- Flexport became Shopify's official logistics partner last year, after Shopify sold its logistics arm to the freight forwarder. Shopify earns an unspecified share of revenue for merchant orders processed by Flexport under an agreement that took effect in November, per the e-commerce company's annual financial report.
Dive Insight:
Shopify abandoned its efforts to build out in-house fulfillment capabilities last year to refocus and reduce costs. But the company still has a close connection to its former logistics business via its budding Flexport partnership.
"Given our long history of building direct integrations into powerful platforms, we believe that Flexport will be the best partner to carry this vision forward," Shopify President Harley Finkelstein said in an earnings call last year. "And for our merchants, making it easier for them to access fast, reliable fulfillment from port to porch is a shared vision that Flexport will now take the lead on."
That vision has gained steam in 2024. For example, Shopify unveiled the new Shopify Fulfillment Network app as part of its "Winter '24 Edition" announcement. The app allows merchants to connect their stores to Flexport and outsource their fulfillment needs, such as distribution and delivery.
Meanwhile, Flexport has ramped up its fulfillment and shipping capabilities since the Shopify Logistics purchase. The company expects its new "Flexpedited" service will enable shipping in three days or less on about 70% of shipments in its network, versus roughly 25% for shipments using its standard service, at an estimated $1.10 more per unit.
Flexport said on its website that "the intention of the Flexpedited service level is to give merchants as much access to fast delivery speeds as possible without exposing them to the most expensive upgrade costs (primarily air)." Its "Fast Tags" program, a consumer-facing delivery date badge for Shopify and other platforms, began exclusively using the Flexpedited service level earlier this month.
Shopify has invested heavily in Flexport as the forwarder bolsters its services and pursues a return to profitability.
Flexport CEO and founder Ryan Petersen announced in January that the forwarder raised $260 million from Shopify, adding to a previous investment Shopify made in 2022. Shopify also snagged a 13% equity interest in Flexport last year after the logistics business sale.
