- Shopify announced a new fulfillment program for its merchants on Tuesday.
- Called the Shopify Fulfillment Network, the online marketplace has partnered with warehouses around the continent to store merchants’ goods.
- Shopify is also using machine learning trained by its own merchant data to make low-cost two-day shipping possible across most of the continental US for merchants in the program.
- The program mimics Amazon‘s Fulfillment by Amazon service as an added-on bonus where merchants can outsource order fulfillment to a first party.
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Shopify has pulled the cover off its newest initiative to help its merchants take a larger slice out of online shopping in North America.
The e-commerce company that powers the sites and operations behind big online brands like Allbirds and Kylie Cosmetics unveiled the Shopify Fulfillment Network on Wednesday. Shopify has linked together a new system of partner fulfillment warehouses across the US and Canada, making it possible for merchants to outsource their fulfillment to Shopify itself.
Soon, Shopify merchants will be able to use the network to host inventory that will be packed and shipped to customers when an order comes in.
"We’re always thinking at Shopify about how we can take the technology services and systems available to those that are very large and kind of democratize that, make that available to more merchants," Craig Miller, chief product officer at Shopify, told Business Insider.
Merchants can now apply for early access to the program.
The network also uses utilizes machine learning to make the most of its footprint.
"I think the reality is, today, customers kind of expect fast and inexpensive shipping. And oftentimes when you’re an independent e-commerce seller versus if you sell on the marketplaces, it’s still a little bit difficult to offer that," Miller said.
That’s where the network comes in, using learnings based on past customer behavior to distribute product near where it’s most likely to be purchased. To make those predictions, Shopify uses its own data sets, which measure five to 10% of North American e-commerce by the company’s own estimates.
"We’re now able to predict with greater than 85% accuracy where a particular product will sell, and to what geography," Thomas Epting, director of product for the program at Shopify, said.
That means goods will have a lot less distance to travel, and Shopify merchants using the service can offer two-day shipping to customers without bundling in the cost of air mail.
"By the end of this year, we should be able to offer two-day shipping at a very low rate to 99% of the continental United States," Miller said.
There are other benefits to using Shopify’s unified network, too. Since it’s more holistic, the company can keep a more accurate eye on inventory levels, even selling across multiple channels like in physical retail stores. The company can tell merchants when items are selling quickly and more inventory is required, or when items aren’t selling that well and should maybe be discontinued.
Shopify also developed a first-party smartphone app so that merchants can keep an eye on their activity.
"We’re very concerned that we offer a super high-quality fulfillment experience. Because a merchant who outsources their fulfillment — they’re both outsourcing their largest investment [and] outsourcing their buyer experience," Epting said.
The new announcement was part of Shopify Unite, the company’s annual merchant conference where it announces new features and programs. Shopify also announced new software for Shopify’s in-store point-of-sale system, simplified selling across borders, and an upgraded Plus membership plan.
The new fulfillment network closely mimics another online e-commerce marketplace: Amazon’s Fulfillment by Amazon program. FBA lets Amazon sellers outsource storage, packing, and shipping to customers, utilizing Amazon’s more than 130 warehouses in the US to do so.
There’s one key difference when considering the two offerings, however.
"We’re not interested in competing with our merchants. So we’re not going to take their order volume and create knockoff products at lower prices and lower quality to compete directly," Miller said.
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