News / Shopify expands into Europe with multi-year Shippo online fulfilment deal

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Shopify is pursuing its expansion into Europe on the back of a new platform launched by fulfilment provider Shippo.

The e-commerce enabling firm is the launch customer for Shippo for Platforms, which offers “seamless integration of shipping functionality” with online sales on platforms like Shopify.

According to one report, the pair have struck a multi-year partnership, “accelerated by a sizeable financial investment in Shippo’s business, product and carrier ecosystem”.

Rick Watson, founder & CEO of e-commerce consulting firm RMW Commerce, said: “Shopify is investing significantly in expanding its European business and shipping is a missing component.”

Lately, Shopify has taken steps to build up its fulfilment capabilities, which have relied on third-party carriers and warehousing providers. Its recent revelation that it expects to spend $1bn on building a network of distribution facilities across the US to enable next-day or faster deliveries, was not well received in financial markets, sinking its stock 16% (see The Loadstar 28 February).

Mr Watson regards the alliance with Shippo as a gain for both parties. Shippo gets to start its new platform with a major client covering a large and strong market, while Shopify has secured a shipping solution that allows its smaller merchants to embrace a shipping solution without any integration challenges.

Simon Kreutz, president and co-founder of Shippo, said: “Third-party apps are clunky and often result in a poor user experience, but natively integrating Shippo’s shipping capabilities directly within the Shopify platform helps ensure their merchants enjoy all the benefits of Shippo while maintaining the seamless experience they have come to expect from Shopify,”

The delivery solutions provider calls on a network of global and regional carriers with more than 85 players with pre-negotiated rates. For merchants this offers a turnkey solution that allows them to expand rapidly into new markets.

And one day after announcing the partnership with Shopify, Shippo unveiled new service agreements with seven carriers in western Europe. These deals, which involve Colissimo, Correos, DPD DE, DPD UK, Hermes UK, Poste Italiane and Mondial Relay, brings clients service availability in France and Italy and expanded service in the UK, Germany and Spain.

For Shippo, the alignment with Shopify marks a win vis-á-vis rivals Stamps.com and Pitney Bowes, claimed Mr Watson. The arrangement includes tracking as well as label printing, and he described the label aspect as the “crown jewel” in the deal, “because this is the primary source of revenue for companies like Stamps, Pitney Bowes and Shippo”.

Shippo claims to be used by over 120,000 businesses. However, it will not target individual merchants with the new offering, instead Shippo for Platforms is aimed at online marketplaces, which can use it to sign up merchants, onboard couriers, purchase labels and offer merchants a “native service” experience.

With the partnership established in Europe, Mr Watson may be eyeing expanding it to North America, down the road. Shopify is bent on building up a network of US distribution centres to operate itself, but that does not tackle final- and middle-mile transport. In light of how investors responded to these plans and a $1bn price tag, teaming up with a partner that taps into a vast network of carriers may seem a tempting strategy for Shopify.