Sent Items #151: Friday, April 5, 2024

A busy start to the Spring in the world of eCommerce and logistics. Some devastation (Baltimore bridge), politics (Section 321/China sellers), and a couple “I didn’t see that coming” headlines (USPS dropping FedEx in favor of UPS; 1,000 people in India watching your Amazon shopping!)

I want to get into the headlines but briefly remind y’all that just last month I launched a new business called Third Person, a digital marketplace that enables eCommerce brands to discover and engage with 3PLs. It’s a completely new way for brands to find the right 3PL, receive personalized matches, review 3PL profiles and connect with them on their terms.

If you are a brand looking for your first or next 3PL, we’d love to have you sign up here (link).

If you are a 3PL, you can enroll on the platform here (link).

Now onto some stories…

Amazon, Walmart, Temu, and Shein Overlap (link)

• According to Marketplace Pulse research, more than 50% of Walmart sellers also sell on Amazon. The number is undercounted because sellers were compared using their business name, which, while normalized to remove common differences like “LLC” versus “L.L.C.,” couldn’t account for all variations. The overlap is likely closer to 80-90% as the average seller typically starts with Amazon and then expands to Walmart; it’s rare to see Walmart-only or Walmart-first sellers.

• At least 20% of Shein marketplace and Temu’s recently launched marketplace sellers also sell on Amazon and Walmart. Like with Walmart, the actual overlap is likely higher. Almost all are Chinese sellers with inventory in the U.S. Amazon, and Walmart are ideal sources of sellers for Shein and Temu because those sellers are experienced in selling internationally and have imported inventory. In March, more than 50% of new sellers on Amazon and Walmart were based in China; many of them have joined Shein and Temu or will soon.

Amazon's Just Walk Out technology relies on hundreds of workers in India watching you shop (link)

• Amazon is phasing out its checkout-less grocery stores with “Just Walk Out” technology, first reported by The Information. The company is moving away from Just Walk Out, which relied on cameras and sensors to track what people were leaving the store with.

• Just over half of Amazon Fresh stores are equipped with Just Walk Out. The technology allows customers to skip checkout altogether by scanning a QR code when they enter the store. Though it seemed completely automated, Just Walk Out relied on more than 1,000 people in India (!!!!) watching and labeling videos to ensure accurate checkouts. The cashiers were simply moved off-site, and they watched you as you shopped.

• About 700 of every 1,000 Just Walk Out sales had to be reviewed by Amazon's team in India in 2022, according to The Information. Internally, Amazon wanted just 50 out of every 1,000 sales to get a manual check, according to the report.

UPS to replace FedEx as U.S. Postal Service's primary air cargo provider (link)

• UPS announced that it will become the United States Postal Service's primary air cargo provider. The announcement means FedEx's more than two-decade long partnership with USPS will come to an end in September.

• Estimates suggest that the USPS business was contributing about $1.5 billion to FedEx’s revenue (about 4% of their Express units volume), with zero EBIT contribution, so this is a generally positive change for FedEx over the mid to long term.

• UPS strongly believes this business will be accretive to margins and that this new business fits “beautifully” with its strategy of leaning into segments of the market that value its integrated network.

• The Postal Service began shifting First Class packages from air to ground two years ago, and have rebranded this service as Ground Advantage. They still maintain their Priority Mail network, a large share of volume which travels by air.

Fulfillment Startup Stord Expands With Logistics Acquisition (link)

• Stord, which was valued at $1.3 billion in a funding round nearly two years ago, is buying ProPack Logistics and its six warehouses across North America. Stord said the purchase price was in the tens of millions of dollars.

• Stord is trying to boost its revenue stream through acquisition in a deal that adds warehousing scale while signaling a potential looming consolidation in the highly-fragmented 3PL world. 

• ProPack’s facilities are temperature-controlled, allowing Stord to offer specialty storage to companies making beauty, health and nutrition products, he said. Henry said he sees that sector as a growing market compared with goods such as craft materials that were popular during the pandemic. 

• The deal comes as venture backing for logistics-focused startups is receding and companies are under greater pressure to produce profits. Stord says its sales grew at a 300% annual pace in 2020 and 2021, when pandemic-driven demand fueled a boom in online sales. Growth has since retreated and some retailers are slowing their investments in eCommerce. That’s pushing 3PLs to get more creative to keep revenue growing.

How U.S. Sellers Are Embracing Trade ‘Loophole’ That Has Boosted Shein and Temu (link)

• This to me feels like one of the hottest topics of conversation in eCommerce. Under the U.S. trade provision known as de minimis, originally part of the Tariff Act of 1930, individual imports under $800 in value are exempt from custom taxes and duties. While it was originally crafted for the benefit of American tourists, importers such as Shein, Temu and other firms including U.S.-based sellers can use it as well by addressing packages sent from outside the country to individuals. That technically makes the shopper, not the seller, the importer.

• The number of such imports has skyrocketed. The U.S. is currently processing 4 million de minimis shipments per day, up from 2.8 million per day at the same time last year. That would put the U.S. on track to import about 1.5 billion de minimis shipments this year, triple the number from 2019. The explosive growth has drawn the ire of U.S. lawmakers and other critics, who call the de minimis provision a loophole that needs to be closed. They argue that it puts U.S. companies at a competitive disadvantage and allows goods made with forced labor to enter the country more easily.

Amazon Sellers Plagued by Surge in Scam Returns (link)

• Customers regularly ship junk back to merchants (example: used soap bars) and claim they are returns, often with little to no penalty, according to sellers who say Amazon’s policies favor customers. It’s just one sore point in what has often become a contentious relationship. 

• Return theft represents one sore point in what has become an often contentious relationship between Amazon and its independent sellers. The Federal Trade Commission’s continuing lawsuit against the retail giant deals in part with how the company treats its sellers. 

• The National Retail Federation says return fraud has become a “major issue for our industry.” About 13.7% of returns in 2023 were fraudulent, accounting for $101 billion in overall losses for retailers, the federation said. As more consumers have adopted online shopping, return theft has become prevalent and Amazon hasn’t done enough to stop it, sellers said.

• One way to curb this is leveraging software like Two Boxes (disclosure: I’m an advisor). Let me know if you’d like an intro!

I Work in Supply Chain Logistics. Here’s What I Advise After the Tragedy in Baltimore. (link)

• Great editorial from Ryan Petersen, CEO of Flexport, a leading global logistics platform. Last year the Port of Baltimore processed 1.1 million 20-foot containers’ worth of cargo, making it the ninth-busiest port, based on trade volume in the United States, and the most important port serving our nation’s capital. It’s also the busiest U.S. port for car shipments, with more than 800,000 vehicles moving through its waters onto its docks and across its roads and railways in 2023.

• Baltimore has the fourth-largest port on the Eastern Seaboard. The East Coast of the United States received over 450 million tons of cargo by ship in 2021. Baltimore’s 50-foot channel and berths allow it to handle larger ships than many other U.S. ports.

• America’s supply chain infrastructure is central to our country’s prosperity. We should invest far more to dredge our ports and enable them to handle larger ships, build new rail connections, automate port operations and employ container dispatching software to increase the throughput of trucks loading and delivering containers. The failure to do so leaves us weaker and more vulnerable when catastrophe strikes.

- Matt

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