Shopify obtains 6 River Systems for $450 million to grow its AI-powered fulfillment network

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Shopify has announced that it is acquiring 6 River Systems, a startup centered on fulfilling automation for e-commerce and retail operations. 

This deal is estimated at approximately $450 million, which is 60% in cash and 40% in shares.

At a conference in June, the company announced its Shopify Fulfillment Network.

About Shopify Fulfillment Network

This Network uses machine learning to assure timely deliveries and lesser shipping costs. 

Shopify’s fulfillment centre spans across countries including California, Georgia, New Jersey, Nevada, Ohio, Pennsylvania, and Texas. 

The Network, which is exclusively available in early access, helps dealers that ship between 10 and 10,000 packages per day. 

The company expects to support between 3 and 30,000 packages per day eventually. 

The 6 River Systems acquisition seems like an attempt to speed up that growth.

Robots in the warehouse

6 River Systems is famously known for its Chuck autonomous vehicles which can move packages in warehouses. 

Certainly, Shopify assumes that adding the robots to its fulfillment network will boost the speed and security of warehouse operations.

This can happen by enabling on-site associates with daily tasks, including inventory replenishment, selecting, distributing, and packing.

As Shopify intends to stimulate the growth of its AI-powered fulfillment network, it ensures to keep selling 6 River Systems’ solution for warehouses. 

The startup’s solution runs in more than 20 facilities in the U.S., Canada, and Europe.

It also fulfills millions of units every week for companies like Lockheed Martin, CSAT Solutions, ACT Fulfillment, DHL, XPO Logistics, and Office Depot.

Shopify does not assume the transaction to have any real effect on its revenue in 2019. 

But it will develop the company’s costs for 2019 by $25 million.

This includes a $10 million in performing expenses, $8 million in amortization of uncertain assets, and $7 million in a stock-based settlement. 

The company does assume 6 River Systems to produce annual billings of approximately $30 million in 2020.

More About 6 River Systems

Established in 2015 by Jerome Dubois, Rylan Hamilton, and Chris Cacioppo, 6 River Systems is situated in Waltham, Massachusetts. 

The organization had raised $46 million from Eclipse Ventures, Menlo Ventures, Norwest Venture Partners, and iRobot. 

Dubois and Hamilton were former executives at Kiva Systems. 

6 River Systems’ stockholders have already confirmed the deal. 

In the $450 million amount is approximately $69 million is included for the startup’s patrons and workers.

This acquisition is expected to conclude in Q4 2019.

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