In this special edition of Supply Chain Matters This Week in Supply Chain Tech we highlight two significant developments involving supply chain management focused technology involving providers Shopify and Panasonic Corporation.
Major Acquisition by Shopify
Online commerce platform provider Shopify, often compared to Amazon in the ability to support small and mid-sized businesses create and maintain an online shipping presence, announced thi9s week its intent to acquire end-to-end online logistics San Francisco based fulfillment provider Deliverr for a reported $2.1 billion. This deal represents the largest thus far for Shopify.
Supply Chain Matters has often echoed online fulfilment industry speculation as to whether Shopify would ultimately move beyond its online ordering platform capabilities and offer a one-stop ordering and logistics fulfillment capability for businesses. In October of 2020, Supply Chain Matters Founder and technology industry analyst Bob Ferrari interviewed the director of the Shopify Fulfillment Network. The Ottawa, Canada based provider at the time had experienced five years of growth in five months as a result of the COVID-19 restrictions on businesses, requiring an all-out effort to support new customer needs. When the pandemic first hit, the company’s CEO literally shelved all of existing 2020 plans and focused full resources on helping small businesses navigate to an online presence. The provider has placed a special effort in its business strategy to not compete with its merchants but rather seeks to be a ”one-stop” platform technology provider for businesses including availability of customer buying intelligence tools that can identify what customers tend to buy and when. The provider additionally had plans to eventually provide for more one-stop logistics fulfillment capabilities.
This week’s announcement provides evidence that is indeed the direction. Noted in a published Shopify blog was the following statement:
“With the addition of Deliverr’s world-class software, talent, data, and scale, SFN aims to become the most robust end-to-end logistics platform that gives merchants greater control of their inventory across all sales channels. Together, SFN and Deliverr will handle all of the hard stuff so merchants can focus on running their business and delighting customers.”
Founded in 2017, Deliverr supports more than one million orders per month for thousands of merchants across the United States. This column’s prior mention of San Francisco based Deliverr was in February of 2020 when the provider announced completion of an additional $40 million Series C funding round. The provider orchestrates the online order fulfillment needs for merchants selling their products on either the Amazon.com, Walmart.com, eBay and Shopifly online shopping platforms, leveraging a network of U.S. wide fulfillment centers. The company’s technology allocates inventory among distribution centers while allowing hosted sellers to tag items with special badges that denote required shipping times and whether items qualify premium programs such as Amazon Prime.
Noted is that Shopify intends to offer merchants a one-stop destination for their logistics fulfillment needs from initial receipt of inventory, fast delivery and easy returns. The plan is to reportedly integrate Deliverr with Shopify’s direct-to-consumer fulfillment operations including a prior acquisition of warehouse focused collaborative robotics provider 6 River Systems inside owned and partner operated warehouses. Shopify acquired 6 River Systems in 2019 for $450 million.
Shopify Fulfillment Network, 6 River Systems, and Deliverr will reportedly form a broader logistics unit under the group’s newly appointed CEO, Aaron Brown, who has led Shopify Fulfillment Network since 2020.
Panasonic Holdings Announces Formal Plans for Blue Yonder
Panasonic Holdings Corporation and Panasonic Connect Co., Ltd. announced this week that they will begin preparation for listing on the stock exchange of their supply chain management business which will be anchored by supply chain planning and execution technology provider Blue Yonder (previously known as JDA Software)
Supply Chain Matters readers will recall that in April 2021, Panasonic announced that the Japan based manufacturing and services company would purchase the remaining 80 percent of Blue Yonder shares for $5.6 billion, and with the repayment of outstanding debt, a total investment of $7.1 billion. The transaction had valued Blue Yonder at an astounding $8.5 billion. At the time, the deal called for Panasonic to provide $3.5 billion in cash with the remainder financed by a hybrid capital financing arrangement. The acquisition has now completed and Blue Yonder remains a wholly owned subsidiary of Panasonic.
This week’s announcement clarifies that Blue Yonder will be the anchor of a new supply chain management company, which will bring together complimentary supply chain technology capabilities within Panasonic Connect’s Gemba Solutions Company and Technology Research & Development Division. Specifically noted:
“The organizational and capital structure of the company will be based on the premise that the new company is positioned as an important consolidated subsidiary and that Panasonic holds majority voting rights. The goal of this organizational structure is to enhance solution competitiveness, and corporate value and drive the companies’ vision to deliver the Autonomous Supply Chain to the edge.”
The company’s Board of Directors has resolved to now commence preparations for a potential stock exchange listing of the supply chain management business with aim to achieve differentiation of Blue Yonder’s SaaS solutions in order to secure higher growth and profitability
An outlined growth plan indicates aggressive investments in Blue Yonder’s capabilities including R&D and potential M&A aimed to grow the company’s SaaS business in North America, EMEA and Asia Pacific. The plan further indicates intent to expand Blue Yonder’s technology within Panasonic Group along with increasing customers in the Japan market, growing horizontally to other geographic markets by leveraging Panasonic’s customer base and power in the Asia Pacific region.
An attached note to the announcement cautions that any listing of shares, approval from the stock exchange and other related authorities remains to be acquired and depending on that process, it may be necessary to either reorganize Panasonic Group or conclude that the supply chain management business will not go public.
Blue Yonder’s Recent Financial Performance
This week’s news release provides highlights of Blue Yonder’s recent Q1-2022 financial performance.
Total revenue for Q1 was reported as $289 million, up 28 percent or 11 percent on a year-over-year basis. SaaS revenues were $113 million, up 37 percent. The company reportedly added 37 new customers during the quarter and closed on 16 new deals reportedly exceeding $500,000. SaaS revenue backlog was noted as $1.17 billion, and the release indicates strong bookings growth for Blue Yonder’s Luminate Commerce business.
There was no mention of profitability.
Extrapolating the Q1 total revenue performance, one could surmise that Blue Yonder has a current annual revenue rate of $1.2 billion with roughly an equivalent SaaS revenue backlog. That equates to the stated valuation of $8.5 billion communicated at the time of Panasonic’s acquisition.
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