Sent Items #154: Friday, May 3, 2024

A strong new subscriber week. I attribute most of that acquisition to my friend Aaron Rubin, CEO and Founder of ShipHero (and also my wife’s favorite WMS system, see here) spreading the love of Sent Items on his social channels. You, too, can do the same by sharing it on your socials, in your company Slack channels, over email .. just paste this link.  THANK YOU!

Why should you share Sent Items?   Because y’all get news here before it breaks!

Example 1:

This past week we got news of Airhouse, an emerging player in the fulfillment market, abruptly close down. Supply Chain Dive has a couple quotes of mine from an article they published yesterday (link).

I’ve written ad-nauseam about the 4PL market and have shared my general disdain for this model. I won’t rehash it here.

Just three weeks ago in Sent Items #152 (link) I wrote the following:

Let’s take a look at 4PLs - without naming names - if I had a nickel for every time a VC/PE shop asked what I thought about the model, shared my honest, genuine opinion (I’m not one to sugarcoat!) and still proceeded with investing, gosh, I’d have at least a dollar or two in my pocket. While I’ll never root for failure in the industry - in fact, I believe a rising tide lifts all ships - it is validating, maybe somewhat vindicating, when the gravitational forces of physics get to work in capitalism.

Back in June 2023 - almost a year ago - in Sent Items #139 (link) I wrote:

I stand my ground in disbelieving that 4PLs are the answer. I’ve said for years how underwhelmed I am with this “cool, sexy, venture-ridden” 4PL model. Growing eCommerce brands demand a high-level of customization, dynamism, account management and real-time information. Fulfillment is the business of exceptions management - a need information now industry - and creating additional layers between brand and 3PL is just counterintuitive. Larger 3PLs understand this and have mostly avoided partnering with 4PLs.

A year earlier in February 2022, Sent Items #124 (link) I wrote:

I stand my ground in disbelieving that 4PLs are the answer. I’ve said for years how underwhelmed I am with this “cool, sexy, venture-ridden” 4PL model. Growing eCommerce brands demand a high-level of customization, dynamism, account management and real-time information. Fulfillment is the business of exceptions management - a need information now industry - and creating additional layers between brand and 3PL is just counterintuitive. Larger 3PLs understand this and have mostly avoided partnering with 4PLs.

Brands want to go direct to the source, and those that are too small for 3PLs probably shouldn’t be outsourcing to a 3PL at all, unless it’s Amazon, who can afford to offer fulfillment at a discount due to the additional revenue streams they generate on a sale. The challenge is finding the right 3PL partner for a given brand. Searching “best 3PLs”, or Facebook groups, Twitter, or Reddit threads are not the right approach to finding the best partner for you. Unfortunately most brands haven’t realized this, leading to the continuous cycle of “everyone hating their 3PL”.

A month earlier, in January 2022 Sent Items #123 (link) I wrote:

I’ve witnessed the complications brands face working with 4PLs. I’ve heard from many more. Fulfillment is a real-time, need to know now, get to the source reality. With 4PLs as middlemen, it inherently complicates and elongates the communication while obscuring the root of the problems. The promise of easing the scaling from 1 node to multiple, and providing superior technology and account management, just isn’t accurate. There are multiple throats to choke when problems arise.

And that’s just on the merchant-facing side. How do 3PLs who partner with 4PLs feel? Surely many are pleased, but those whom I’ve spoken to share adverse tropes, highlighting things like “it was initially compelling, but then they got in the way”, or “meaningful share of volume, minimal share of revenue”.

Alas….. the incredible force of gravity is rearing its head.

Example 2 of breaking news:

One of my favorite e-commerce newsletters, EcommerceBytes covered the blurb I shared in last weekend’s Sent Items (link).  This was fun to see - I’ve been reading Ina’s work throughout my 15 years in e-commerce, and they were entangled in a fascinating and wild scandal with eBay that was covered on 60 Minutes last year (link).

Finally, earlier this week I received the email below from a 3PL owner we have learned to admire. It was in response to my apologies for a messy onboarding that a brand who discovered them on Third Person had. 

I've redacted the sender's name so as to avoid awkwardness from their client(s), albeit the message is so strong that I had half a mind to include. 

Nonetheless, in the ever changing market for 3PLs, and the common challenge that brands have with finding the right partner, it is inspiring and encouraging to get a note like this.

There are many, many great 3PLs out there. Take the time to really understand who your 3PL is, what matters to them, and who are the folks running the operations. That's so much more important than settling on one with a catchy name or cute website.

Catch my 4-mintue interview with my friends at Storetasker here:

Just a couple quick headlines as we head into the weekend:

Amazon’s Fast Delivery Moat (link)

• In March, nearly 60% of Prime member orders arrived the same or next day across the top 60 largest U.S. metro areas. That’s up from “more than half” in the Q2 2023, according to Amazon.

• Buying from Walmart online has two experiences: a fast but limited selection for store pickup or a slower but wide selection for general e-commerce (Walmart fulfills 50% of online orders from one of their stores). eBay has hundreds of millions of listings, but only some come fast, and none consistently. Temu and other direct-from-China services like AliExpress and Shein are growing selection but ship in 5+ days or sometimes weeks.

UPS, FedEx fuel surcharge hikes to heat up delivery prices (link)

• Like death and taxes, the carriers are raising their rates again! UPS recently increased its fuel surcharge calculations for deliveries and FedEx is slated to follow with its own increase next week.

• UPS increased the percentage markup for its domestic Ground, Air and SurePost fuel surcharge tables by 0.50% on Monday. FedEx is hiking its U.S. ground and Express fuel surcharge tables by 1% effective next week.

• The increases come on top of fuel surcharge hikes the two delivery giants levied in December. OnTrac, the fast-growing carrier competing with FedEx and UPS, is also increasing its fuel surcharge tables by 0.50% starting May 27.

Have a great weekend!

- Matt

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