Shopify Fulfillment Network to Cut Number of Locations

Late last week, Business Insider reported that Shopify Fulfillment Network is cutting contracts at several warehouses and fulfillment centers in the US, marking a potential shift in their strategy.

Today, they attempted to clarify the impending cuts by stating, “We will be making changes to the SFN (Shopify Fulfillment Network) to help merchants compete with big-box retailers, such as prioritizing two-day shipping at affordable prices and access to easy returns for U.S. shoppers.”

The company is expected to update sellers and the market on their strategic shift during its earnings call next month, but in the meantime, merchants are confused.

How does scaling down the number of SFN fulfillment locations in the US help merchants using SFN access affordable two-day shipping, as they attest?

Wedbush analyst Ygal Arounian sums up Shopify’s challenge well: “Shopify is nowhere close to building a type of fulfillment operation at the scale of Amazon, and investors should not expect anything like that in the near term”. Investors have taken notice of Shopify’s recent struggles – the stock is down nearly 50% from its November high of 1,690.60.

We’d assert that this change is more important for merchants than investors, as it reveals that Shopify Fulfillment Network isn’t an FBA alternative, and instead is moving in the opposite direction.

Merchants that want to power their sales with affordable, reliable fast shipping will need to look elsewhere for a fulfillment solution.

Shopify Fulfillment Network’s Pros & Cons

Like Amazon FBA, Shopify is building its own logistics solution for eCommerce sellers, Shopify Fulfillment Network.

It combines seamlessly with a merchant’s Shopify account, making it an easy way to start fulfilling eCommerce orders for someone with a new DTC store. It also comes with software that helps merchants with order and inventory management, and it boasts a dedicated customer service team that helps merchants overcome operational challenges.

Unfortunately for merchants with big growth ambitions, it’s focused on fulfilling Shopify orders and not orders from other channels. On top of that, it doesn’t offer fast shipping by default. Merchants that want to win on multiple channels will likely need an additional 3PL for their other orders. More importantly, they won’t be positioned to offer affordable fast shipping to their customers. With Amazon and other national fulfillment services setting the bar at 1- and 2-day free shipping, merchants that rely on SFN will be left at a significant disadvantage.

Cahoot: The Best Shopify 3PL

If you need a fulfillment solution that keeps up with Amazon FBA at always-affordable prices, give us a call.

Unlike Shopify Fulfillment Network, Cahoot’s fulfillment network has no trouble keeping up with FBA. We’ll help you level the playing field with marketplaces and delight your customers with a stellar, Amazon-like delivery experience – right on your Shopify store.

It sounds expensive, but our innovative peer-to-peer model offers low-cost fast fulfillment by design. As a result, our pricing is typically lower than that of other top providers, but we can beat them on fulfillment speed and reliability.

And of course, we don’t stop there. We have pre-built integrations with major marketplaces to fuel your multi-channel growth.

If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait to show you how Shopify fulfillment was meant to be.