September 9, 2019 / 10:01 PM / 8 days ago

Shopify to buy warehouse technology provider for $450 million

FILE PHOTO: Canadian e-commerce company Shopify Inc logo is shown on a computer screen in the illustration photo in Encinitas, California May 3, 2016. REUTERS/Mike Blake/File Photo

(Reuters) - Shopify Inc said on Monday it would buy warehouse technology provider 6 River Systems Inc for about $450 million, as it looks to accelerate growth of its fulfillment network.

Shopify unveiled plans in June to spend $1 billion to run a warehousing network in the United States to take on the likes of Amazon.com Inc and eBay Inc.

The deal underscores how e-commerce companies and investors increasingly view robotics as key to keeping up with shoppers’ expectations for reliable and fast delivery. The news follows Amazon’s acquisition of Canvas Technology earlier this year, which has built autonomous carts that move goods around warehouses.

Boston area-based 6 River sells a self-driving cart system called “Chuck” that guides workers through warehouse aisles to pick customer orders in the most systematic way possible.

“When the picker is done, they just press a button, and off the robot goes,” said Matt Murphy, a member of 6 River Systems’ board and partner at Menlo Ventures, which invested in the company. “It minimizes a lot of human movement.”

Co-founders include veterans from Kiva Systems, which Amazon acquired in 2012 to help store and move inventory more efficiently. While Amazon took the Kiva robots in-house, Shopify said 6 River Systems will keep selling technology to warehouses.

“We see the company’s leadership position in warehouse technology as a potential cornerstone of Shopify’s nascent effort to improve the fulfillment capabilities for merchants in the face of Amazon one-day delivery,” Baird Equity Research analyst Colin Sebastian said in a note.

The deal, which consists of about 60% in cash and 40% in Shopify Class A subordinate voting shares, will have no material impact to Shopify’s revenue in 2019, the Canadian e-commerce company said.

Shopify expects the deal to close in the fourth quarter this year.

Reporting by Debroop Roy in Bengaluru and Jeffrey Dastin in San Francisco; Editing by Maju Samuel and Christopher Cushing

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