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Flexport is undergoing a reorganization of its omnichannel business, integrating its freight forwarding and fulfillment teams as the company aims to push its business further toward profitability.
Due to redundancies as part of the integration, the company will be cutting headcount by roughly 2 percent, a Flexport spokesperson confirmed.
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The reorganization is a “natural next step,” the spokesperson said, 16 months after Flexport acquired Shopify’s logistics business, including the e-commerce fulfillment technology unit Deliverr. That acquisition came in exchange for a 13 percent equity stake in Shopify, bringing the digital freight forwarder’s total ownership to 17 percent.
“We continue to sharpen our focus on larger customers and drive down operating costs, giving us the ability to profitability scale our business and creating value for both our customers and Flexport,” said the spokesperson in a statement. “We have made great progress towards our growth and profitability goals in 2024, and the reorganization will enable our teams to leverage Flexport’s full suite of logistics capabilities to solve customer problems and help them grow.”
CEO Ryan Peterson reiterated in an internal memo to staff that the reorganization sets the firm up for a “successful next few years of profitable growth” and “will increase our velocity in that direction.”
Despite the windfall of money Flexport has raised, reeling in an estimated $2.7 billion in capital including $260 million coming from Shopify to kick off 2024, the Shein partner’s losses are still heavily mounting.
Although Flexport itself doesn’t disclose financial numbers, Shopify incurred a net loss on its Flexport investment of $44 million in each of the previous two reported quarters, tallying $88 million in a six-month span. Results for the most recent quarter are still unknown since the privately held Flexport reports to Shopify on a one-quarter delay.
Shopify has not revealed its stake in Flexport since Sept. 30, 2023, when it was 17 percent. If its share of ownership remained near that ballpark in that two-quarter span, the digital freight forwarder would have tallied up hundreds of millions in estimated losses in the period.
With losses of that magnitude potentially mounting for Flexport, the company has a large ship to turn around if it seeks to regain profitability, which it last generated in 2021.