(Bloomberg) – Shopify Inc. plunged the most since March 2020 after a report that the Canadian e-commerce company terminated contracts with several warehouse and fulfillment partners.

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Its U.S.-traded shares closed Friday 14% at the lowest level since September 2020 on high trading volume after trade publication Insider said Shopify should have about half its previous capacity for orders. e-commerce for merchants once the changes are made. implemented. The report quotes executives from four fulfillment companies in the Shopify network.

Baird analyst Colin Sebastian said if this is true, now is a logical time for Shopify to develop its own fulfillment warehouses instead of relying on third parties.

“As they reach a ‘fork’, the time seems right for Shopify to change course in fulfillment, the question being which direction are they turning,” Sebastian said in a note to customers.

“In the evolving e-commerce landscape, it’s pretty clear that fulfillment and delivery need to be core competencies, and for Shopify, the sweet spot of a hybrid ‘asset light’ approach has proven to be a challenge to scale,” he said.

Shopify confirmed that it has canceled contracts, but declined to provide further details on the number of fulfillment centers and warehouses affected by the changes. The company said its ability to fulfill orders would not be affected.

“We’re making improvements to SFN that will make Quick Fulfillment more accessible and lower cost, ultimately enabling more merchants and their customers to have the best shipping experiences possible,” the Shopify spokesperson said. , Amy Hufft, in an email statement. SFN stands for Shopify Fulfillment Network.

At least three analysts have cut price targets on Shopify since Tuesday, pushing the average target to its lowest level since July, as e-commerce growth slows as pandemic restrictions lift and shoppers return to stores physical. It has fallen 48% from its peak in November.

Amid a massive sell-off in tech stocks late last year, Shopify was dethroned as Canada‘s most valuable company. It is now Canada’s third-largest public company by market value, behind two banks.

(Updates with comment from Shopify)

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