Shopify last week Announced that it would be the last big tech company to suffer mass layoffs. The company is cutting 20% of its workforce of 11,600 people. The news came during earnings that beat Wall Street expectations, sending its share price soaring as a result.
Also included in the announcement was news that the Canadian e-commerce giant had found a new owner for 6 River Systems, the warehouse automation company it bought in 2019 for nearly $500 million. It was about as good an opportunity as anyone could ask for. The category has been on the rise for the past decade, but things really started picking up during the pandemic, and 6 River held a healthy five-year lead.
But Shopify ultimately decided to release 6 River amid broader losses. Shopify CEO Tobias Lütke did not address the sale directly in his open letter on the layoffs. However, he addressed the related sale of Shopify Logistics to Flexport, noting:
Shopify’s main quest is to make commerce simpler, easier, more democratized, more participatory, and more common. I think we have built the best trading platform in the world for that. Technological progress always revolves around simplicity, and entrepreneurs are more successful when we simplify. But we are now at the dawn of the AI age, and the new capabilities it unlocks are unprecedented. Shopify is privileged to be among the companies most likely to use AI to help our customers. A co-pilot for the venture is already possible. Our primary pursuit demands that we build the best that is now possible, and that has just changed completely.
Obviously, the 6 River acquisition was part of building the logistics side of the business by providing automated 3PL to vendors. Ocado Group, an English grocery technology licensor, will become the new parent of the robotics company.
“We are delighted to welcome new colleagues to the Ocado family. 6 River Systems brings exciting new IP and possibilities to Ocado’s broader technology heritage, as well as valuable R&D and business experience in non-grocery retail segments,” Ocado CEO James Matthews said in a statement. “Chuck robots are currently deployed in more than 100 warehouses around the world, with more than 70 customers. We look forward to supporting 6 River Systems to build on these and new relationships for years to come.”
Questions remain around the deal. As Jerome Dubois, co-founder of 6 River and Shopify’s VP of logistics, recently told me in an interview, the robotics firm reached an agreement with Shopify that allowed it to continue supplying systems to customers. That list, which included Ocado, was a far cry from Amazon’s Kiva deal, which suddenly left customers without access to robotic systems.
Dubois says he had the conversation “from the beginning,” adding: “We had a strong positive trajectory; we had strong investors. Everyone was really bullish on it. That’s not what it’s been. It’s been the complete opposite. We’ve been managed regardless of Shopify, we continue to invest and grow the business.”
That conversation happened at the end of March. Economic headwinds have a way of changing these things quickly.
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