It is a volatile business environment that requires strategic partnerships to ensure sustainability. Shopify, a prominent e-commerce company, is facing stiff competition from Squarespace. Acquiring rivals or complementary companies can help a company increase their competitiveness and position themselves as a market leader. Shopify accounts for around 11% ecommerce clients. Squarespace and WooCommerce own 18% and 28% of the market respectively (Vailshery 2022). Shopify is also responsible for 31% percent of websites that utilize e-commerce technology in America. Although Shopify is a well-known brand, it has not been able to grow its market share. The company’s sustainability is dependent on continuous innovation and acquisitions. Shopify purchased Deliverr for $2.16 million to improve its ecommerce offering. Deliverr allows virtual companies to grow their revenue and deliver on time. Deliverer uses predictive algorithms that advise retail customers to store their stock in 2-day delivery zones. Shopify would benefit from the purchase to improve its data analytics capabilities. This will result in a better customer value proposition (Gauri and al., 2002).
Certain companies may be at greatest risk
Acquisitions can be unpredictable and involve culture crush and the reorganization or organogram of the business. There are also human resource integration problems, market share management and customer expectations. Shopify now has the ability to oversee all aspects of Deliverr’s operations. There may be differences in cultures between the two companies, which could impact the ideals of new corporation. In addition to the purchase, the organization’s structure will be affected by the change. The business will have to review its organizational chart and add or remove personnel. Organizations are at risk from workers resisting change and possible sabotage. Shopify needs to consider the best way to incorporate stakeholders’ interests in order to be accepted. Shopify’s fulfillment network was purchased by Deliverr to reduce supply chain complexity and allow merchants of any size to have access to logistics. This purchase will also improve Shopify Fulfillment Network (SFN’s) merchant inventory, from the port to warehouses. The merchandise will then be distributed via the sales network at the customer’s desired destination. The institution does not know how the customers will perceive this purchase. Gauri et. al., 2002. Customers’ trust and confidence in the company may increase or decrease depending on the outcome. How shareholders perceive the purchase has an impact on the share price and equity. A company that believes it can earn higher returns will have a greater share price, equity and margin. This results in more revenues and margins. Deliverr and SFN may reduce uncertainty in addressing a market segment that is well-established and increase the customer’s value proposition.
Risk management recommendations
While managing many organizational interests, it is important to conduct stakeholder analysis. Shopify has multiple stakeholders with different interests. Shareholders judge an acquisition’s efficacy based upon the increase in stock price. Consumers evaluate it based on its value proposition. Employers evaluate the effect of acquisitions based on their job security and potential for career advancement. Management evaluates the effectiveness of the acquisition based on its profitability and competitiveness.
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