What Should Shopify Do About Fulfillment?

So What Should #Shopify Do About Fulfillment?

Let's get the simple part out of the way first. It should not build a stick of infrastructure. But what then?

Here are my top two ideas for Shopify.

1 - Create a "5PL Marketplace" platform for the procurement of #supplychain services by entrepreneurs and brands. This would have 3 components.

a. Data. Shopify has more data on fulfillment services than most other sources in the world, and the data it does not have or that may be incomplete, many providers would be motivated to cooperate with them due to their market power.

b. Reviews. It's very hard to find a great provider that meets your standards, handles your category, type of goods, and is close to your particular consumers.

Most people just ask a buddy, and to their detriment.

c. Standard Connectivity. One of the challenges with moving 3PLs is that each one has their own integration standard. Some use EDI, some flat files, others have a Shopify Connector. tor. Some have their own OMS or WMS, some have neither.

Shopify could enforce standards here or even create their own, and it would be widely adopted. It is more likely that Shopify can find an architect to design a reusable 3PL or 4PL integration platform than Shopify can run its own set of nationwide warehouses, or even stitch together its own white-label partner network.

2 - Evolve Shopify Flow into a modern, lightweight multichannel OMS.

The line between "automate some repetitive tasks via rules" (Shopify Flow today) and the complexity of last-mile inventory providers, in-store inventory, 3PLs, FBA is very wide. Even small brands have complex fulfillment needs that Shopify's software does not contemplate.

Simple yet customizable orchestration between the various providers procured in Shopify's marketplace would be a must.

An investment or two in line with their typical partner playbook could be in order.

Advantages?

These solutions have the following advantages that Shopify's current fulfillment network does not:

1 - Drives Shopify's flywheel. Similar to how their developer ecosystem powers more apps, which drives more merchant adoption.

2 - Easily defensible. This is not an area that existing supply chain behemoths like Walmart, Amazon, or Target can easily encroach on.

3 - Plays to its strengths. Tobi is a developer in a company full of software engineers, sitting on top of one of the richest data assets in their world.

4 - Capital light. Software and data are high-margin businesses. Logistics is not, while at the same time being capital-intensive.