Shopify creates AI-powered fulfillment network for SMB merchants

The fulfillment network uses machine learning to match orders, route inventory and negotiate rates for merchants.

E-commerce SaaS provider Shopify is launching a dedicated fulfillment network for its merchants as the company works to differentiate its product portfolio from industry rivals. The fulfillment network, announced alongside a bevy of platform and product updates at Shopify's annual partner conference, uses smart inventory-allocation technology, powered by machine learning, to match orders, route inventory and negotiate rates.

The cost of shipping is considered a barrier to growth for many merchants. With its own fulfillment network, Shopify said it will be able to offer merchants lower-cost shopping that's totally managed through Shopify's system.

Shopify CTO Jean-Michel Lemieux said the fulfillment network -- which will include a mix of Shopify-owned and shared distribution centers -- is a first for Shopify, as its merchants historically have had to work with third party logistics providers to ship inventory. Lemieux pointed out that items shipped via Shopify's fulfillment network will arrive in merchant-branded boxes and will support purchases made across channels.

"In some ways we are repeating our vision, in which merchants want to own their brand, and that drives our roadmap," Lemieux said.

At launch, Shopify's fulfillment services will primarily target small and medium sized businesses, and access to the program will depend on a merchant's product type and fulfillment needs. Over time, Lemieux said the network will grow to support merchants of all sizes.

Shopify also updated the Shopify Plus platform for enterprise brands and introduced more global capabilities, including support for 11 new languages, an updated Translations API, and the ability to sell in multiple currencies. As for Shopify Plus, the revamped platform will make it easier for merchants to run multiple sub-brands in stores, with all stores visible from a single interface and a simplified workflow to add new stores. 

Also: How Shopify uses its developer ecosystem to fuel international expansion

Meantime, Shopify's point-of-sale platform received an update with faster and more scalable software, a simplified interface, new customer service shortcuts, and extended access to all of Shopify's POS app extensions.

Shopify also added support for 3D models, allowing merchants to display products in video, augmented reality and 3D models within Shopify.

"We are making it easier for people to upload and manage 3D models on their storefront," Lemieux said. "One of the biggest pain points is product returns, and people returning items because they don't fit. We also believe you can't have immersive AR experience without 3D modeling."

On the developer side, Shopify said it's making its most popular libraries available in GraphQL, allowing developers to build faster and more stable apps for merchants. And with the new Shopify App CLI (command-line interface), developers can scaffold an app within seconds by wrapping all app building steps into one command. Shopify also introduced App Bridge, a new consolidated tool that lets developers embed their apps directly into Shopify, including desktop, Shopify Mobile, and Shopify POS.

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