Shopify CEO Tobias Lütke announced early Thursday that the company is cutting 20% of its workforce and selling the majority of its logistics business to Flexport, including Deliverr Inc. Shopify also divested 6 River Systems to Ocado Group. Ocado has terminated 80% of the associates at 6 River Systems according to my sources. Shopify had to write down nearly $2B from the cost of the acquisitions.

“For Flexport, this acquisition enables our vision for a full digital transformation of the global supply chain that we will bring to all customers. This pooling of scale will level the playing field for cost and speed of delivery for all businesses, not just the largest corporations in the world,” said Dave Clark, CEO of Flexport.

Flexport will also become the official Shopify Logistics Partner and provider of Shop Promise for millions of Shopify merchants. Shop Promise enables shipping timelines, including two-day and next-day delivery options to customers of Shopify merchants and will be extensible to all major commerce platforms. These services will be powered by Flexport and available on the Shopify Fulfillment Network app, which offers merchants an integrated logistics experience through.

“A key part of the success of Shopify Logistics to-date has been our mission-aligned and deeply knowledgeable partner, Flexport,” said Tobi Lütke, founder and CEO of Shopify. ”

Shopify now owns 18% of Flexport.

I support the acquisition of Shopify’s logistics assets but as I stated in 2022, “I anticipate that Flexport will become the dedicated logistics provider for Shopify by acquiring Deliverr Inc. However, I believe Shopify will divest 6 River Systems to a different company. The primary issue that I have with Shopify and Flexport, is that they’re operating as separate companies. Dave Clark thinks big about Flexport, and Tobias thinks big about Shopify. I believe Shopify should acquire Flexport or acquire at least 49%. Jeff Bezos grew Amazon by vertically integrating logistics within the company. Shopify and Flexport are better together with Dave and Tobias operating as co-CEOs.”

The Wild Card – what does TikTok do now? Will they partner with Flexport?

The brutal truth is this: Tobias Lütke and Harley Finkelstein made a terrible decision to acquire 6 River Systems and Deliverr in the first place. Their poor decision-making cost Shopify nearly $2B. Tobias has to terminate Harley and bring in a skilled executive who can help him take the company to the next level. Frankly, Tobias should ask Dave Clark to assign an executive from Flexport to support Shopify as well.

Shopify is beginning to remind me of another Canadian company called RIM, that created the BlackBerry. The senior leaders talked a big game but they couldn’t stop making mistakes. This allowed Apple to crush RIM with new products. Shopify is in need of new leadership.