Shopify today announced it is acquiring 6 River Systems, a startup focused on fulfillment automation for e-commerce and retail operations. Shopify has valued the deal at approximately $450 million, 60% in cash and 40% in shares.
In June at its Unite partner and developer conference, Shopify announced the Shopify Fulfillment Network, which uses machine learning to ensure timely deliveries and lower shipping costs. Shopify’s fullfillment centers span California, Georgia, New Jersey, Nevada, Ohio, Pennsylvania, and Texas. The network, which is still in early access, supports merchants that ship between 10 to 10,000 packages per day but the company hopes to eventually support between 3 to 30,000 packages per day. The 6 River Systems acquisition looks like an attempt to speed up that process.
6 River Systems may be best known for its Chuck autonomous vehicles that can move around packages in the warehouse. Indeed, Shopify believes that adding the robots to its fulfillment network “will increase the speed and reliability of warehouse operations, by empowering on-site associates with daily tasks, including inventory replenishment, picking, sorting, and packing.”
Shopify will expand its AI-powered fulfillment network while 6 River Systems will continue to build and sell their solution for warehouses. The startup’s solution is operating in more than 20 facilities in the U.S., Canada, and Europe. It fulfills millions of units each week for companies including Lockheed Martin, CSAT Solutions, ACT Fulfillment, DHL, XPO Logistics, and Office Depot.
“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 said in a statement. “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world.”
Shopify doesn’t expect the transaction to have any material effect on its revenue in 2019. It will increase the company’s expenses for 2019 by $25 million, however, including $10 million in operating expenses, $8 million in amortization of intangible assets, and $7 million in stock-based compensation. The company does expect 6 River Systems to generate annual billings of approximately $30 million in 2020.
Founded in 2015 by Jerome Dubois, Rylan Hamilton, and Chris Cacioppo, 6 River Systems is based in Waltham, Massachusetts. Dubois and Hamilton were previously executives at Kiva Systems (Amazon acquired Kiva Systems for $775 million in March 2012). 6 River Systems had raised $46 million to date from Eclipse Ventures, Menlo Ventures, Norwest Venture Partners, and iRobot.
The deal has already been approved by 6 River Systems’ stockholders. Included in the $450 million amount is approximately $69 million for the startup’s founders and employees “that will vest subject to certain conditions and will be treated as stock-based compensation.” The acquisition is expected to close in Q4 2019.
More to follow