Shopify Buys 6 River Systems for $450M to Boost Fulfillment Centers
Ecommerce software company Shopify will purchase warehouse robotics startup 6 River Systems in a $450 million deal aimed at improving logistics in its new system of fulfillment centers.
Based in Waltham, MA, 6 River Systems makes robotic carts for order fulfillment centers that learn the warehouse layout and product locations in order to help workers more efficiently pick and sort items for ecommerce deliveries. The robots are used at more than 20 facilities in the US, Canada, and Europe, the company says.
Ottawa, Canada-based Shopify (NYSE: SHOP) is a cloud software company that helps retailers develop online storefronts where they can sell their goods. Its June launch of an order fulfillment network makes technology such as 6 River Systems’ self-driving warehouse cart more critical to competing with the one- or two-day shipping that’s become standard at shopping sites like Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT).
The combination is similar to Amazon’s $775 million acquisition in 2012 of Kiva Systems, another Massachusetts-based company that made autonomous robots that moved merchandise around warehouses to help workers fulfill orders. In fact, two of the three co-founders of 6 River Systems met at Kiva and later worked together at Amazon. (The founders are pictured in a company photo above, left to right: Kiva vets Jerome Dubois and Rylan Hamilton, and Chris Cacioppo.)
The move to build and invest in physical commerce infrastructure by previously only software-based Shopify has sparked speculation that the Canadian company is interested in giving Amazon real competition. Analysts have reportedly said that if Shopify develops this order fulfillment network and it gets to two-day shipping, the company can be a real alternative to Amazon.
Shopify says it expects the addition of 6 River Systems’ “Chuck” robot to the fulfillment centers to be critical to driving speed and reliability of warehouse operations. (See Chuck in action here slinging pies at a Thanksgiving holiday charity event.)
“Shopify is taking on fulfillment the same way we’ve approached other commerce challenges, by bringing together the best technology to help everyone compete,” Shopify CEO Tobi Lütke says in a press release.
6 River Systems had raised just $46.6 million in equity funding since its founding in 2015, most recently a $25 million Series B round led by Menlo Ventures. Its other investors include Norwest Venture Partners, Eclipse, and iRobot Ventures.
Shopify says it is buying all outstanding shares of 6 River Systems for $450 million, with 60 percent of that consideration in cash and the rest in Shopify stock. The company says it expects the deal to close in the fourth quarter. Shopify says the deal will increase expenses by $25 million in 2019 and generate $30 million of billings next year.