Sent Items #164: Thursday, August 29, 2024

Happy Thursday! Hope everyone’s ready for a relaxing long weekend before we head into this final stretch of the year.

So many great things to cover in this edition. Lots of news stories, an update on my business that I am excited to share with this community, as well as a few interesting checkout features I’ve come across in the last couple of weeks.

Plenty to get into - this may be my longest newsletter yet! - so take your time reading this over the long weekend. Read it twice, let all the headlines soak in! Then hit reply and share any feedback and comments with me!

Let’s get to it!…

Let’s start with Third Person. Earlier this morning I shared this quick 6-month update on LinkedIn (link). Give it a read, and if you are a brand or 3PL, would love for you to sign up here (for a brand) or (for a 3PL)

I made a purchase the other day on one of my favorite N/A drinks (don’t worry, I still love a great bourbon), and noticed the ability to pay an extra $1.95 for premium customer experience (e.g.- Free Returns, 90-day Satisfaction Guarantee, CashBack Credit, Shipping Protection). Billed as “VIP benefits”. A sucker for new tech companies (and being a VIP), I clicked “yes” to give it a try. 

The company is called Onward. Coincidentally, they are based here in Nashville. I connected with their founder and am very impressed. They work with premium brands like Faherty, Equinox, TRUFF, Create Wellness, Kane Footwear, OpenStore, and many others who are all very customer-centric to further invest in the customer experience at no additional cost to them.

For me, I paid $1.95 on my order, and the next day I received a promo code for 15% off my next order ($9.43). That’s some tremendous ROI. I wish every brand offered this!

I would be glad to connect anyone with the CEO and Founder - hit reply here and let me know!

Speaking of another interesting checkout feature, a friend of mine recently shared this on LinkedIn:

What a smart value exchange that Lulus is offering. A neat way for a consumer to save a few $$, while giving the brand “peace of mind” that the product won’t be returned. After all, giving the consumer 40% off (or $7.60, in this case) is much less than the cost of the return to them.

Alas, a checkout experience I do not appreciate. Here’s a checkout flow I was presented on Sunday morning. The ol’ Standard 3-8 business days, with some conflicting information that I will get it by Thurs Aug 29. Which one is it? If they know it will get to me by Thursday, why confuse the user with 3-8 days? FWIW, I did place the order, it is now Thursday, and my order is still in possession with DHL eCommerce in Hebron, KY, at this point likely not delivering until Saturday. This is a poor checkout UX.

Check this out! Okinawa's first Costco ever opened last week in Nanjo. The store opened 3.5 hours early with over 1,000 people waiting. Despite this, there was a line of cars stretching for five HOURS by late morning. Costco is a phenomenal business.

Walmart to Offer Logistics Outside Its Own Marketplace Sales (link)

• This one takes the cake for the biggest headline in recent weeks. As part of the company's 2024 Walmart Marketplace Seller Summit, the company announced Walmart Fulfillment Services (WFS) is providing new ways for sellers to quickly move merchandise across markets and use Walmart to fulfill any e-commerce retail order.

• Walmart's new Multichannel Solutions program allows sellers to use WFS to fulfill orders from any eCommerce site via Walmart's supply chain. Walmart will fulfill orders and manage returns while offering plain, unbranded packaging, fast, reliable shipping and competitive rates averaging 15% lower than the competition.

• Walmart is launching the program on September 10, in time for Holiday deliveries.

• Through its new Walmart Cross Border import service for full-container-load shipments, WFS can now handle transportation of inbound goods from ports of origin in Asia directly to WFS facilities across the U.S.

• Walmart is also opening its carrier network to sellers for full truckload shipments. Sellers using the Walmart Preferred Carrier program through WFS can now choose to ship a few items or an entire truckload at special rates through carriers vetted by Walmart.

Gloom Falls Over One of China’s Most Successful E-Commerce Giants (link)

• One of China’s e-commerce market leaders is showing deepening problems in its supply chain. Temu owner PDD Holdings this week issued a gloomy outlook that underlined the severity of China’s economic slowdown and signaled that the structure behind the company’s rapid growth is starting to creak.

• Shares of Temu parent PDD plunged 28% on Monday after the company missed estimates for quarterly revenue. The Chinese e-commerce giant was hit hard by a consumer spending pullback and high unemployment rates in its home country. It also saw increased competition from rivals, especially in the U.S., which last year accounted for 60% of its sales. The company is investing more in trust and safety after facing criticism over its labor practices; it's "prepared to accept... potential decline in profitability" as a result.

• After months of protests from its suppliers, PDD says its profit will suffer as the company invests to address supply-chain inefficiencies and reduces fees for merchants. PDD, which has helped shape big changes in the global e-commerce marketplace for online sales, now is trying to reset its relationships with suppliers amid slumping sales, tougher regulatory oversight and growing competition for discount sales.

• Among the changes, Temu is seeking to recruit sellers with inventory overseas, which analysts see as a way to mitigate the potential risk of crackdowns across the world that might affect Temu’s business. Another obstacle: a new lawsuit from main competitor Shein.

Amazon allowing sellers to ditch physical returns (link)

• Amazon has launched a program allowing sellers using its fulfillment services (FBA) to issue product refunds without customers returning the item, according to a recent announcement.

• Fulfillment by Amazon Returnless Resolutions will help sellers avoid returns-related fees by cutting out the physical reverse logistics process and letting customers keep the items instead, the company said. Some products are ineligible for the program, including dangerous goods, heavy and bulky items, and those with an average sales price above $75.

• Sellers and customers tapping into Returnless Resolutions have to be in good standing with Amazon, as defined by the company. Only customers without “a history of abuse” can be offered a returnless resolution, the company said. If the shopper making a return is deemed ineligible, the item may still be sent to an Amazon fulfillment center as normal.

• Walmart Marketplace also gives sellers the ability to allow customers to keep their items and receive a full refund.

USPS proposes changes to save $3 billion per year, starting in 2025 (link)

• The U.S. Postal Service wants to save $3 billion annually on changes that reflect its greater reliance on streamlined regional networks — while retaining local mail delivery times of one to three days and allowing customers to track some delivery schedules with greater precision.

• The proposal announced last week would adjust mail delivery times while maintaining a commitment to a maximum five-day delivery for the flagship Ground Advantage program nationwide and a maximum three-day delivery for local first-class mail.

• Postmaster General Louis DeJoy said the changes to take place next year are necessary to “enable us to operate more efficiently and reliably, grow our business and give us a chance for a viable future” after an 80% drop in first-class mail since 1997 and a corresponding growth in packages. All told, the Postal Service has amassed more than $87 billion in losses from 2007 through 2020.

UPS plans surge fee for all China-to-US imports (link)

• UPS will levy a per-pound charge on all U.S. imports coming from China and several other countries starting Sept. 15, according to a Thursday notice to shippers.

• Ten countries will have a $0.25 per-pound “Surge Fee” applied to shipments headed to the U.S. A $0.50 per-pound charge will apply to shipments from China, Hong Kong and Macau.

• The fee is based on a shipment’s billable weight and is subject to UPS’ fuel surcharge. The company also said the fee, which had no listed end date, could be adjusted in the future.

• Although FedEx hasn’t announced a directly comparable fee yet, it did recently implement a $0.25 per-pound import demand surcharge on Aug. 5 for parcel shipments from China, Hong Kong and the Philippines into the U.S. The minimum charge is $1 per shipment.

Here’s How One Retailer Is Finding Profits in Borrowed Clothing (link) (link)

• Oh hello, Rent the Runway 👋 (and Nuuly, owned by Urban Outfitters)

• Urban Outfitters and its Nuuly brand are finding that automation is among the most important accessories when it comes to renting apparel. Each item carries a tag linked to its location in a central tracking system so it can be found immediately when a customer orders it. Then an automated network of cables crisscrossing the 310,000-square-foot facility carries the clothing on a hanger directly to a worker who boxes up the item for shipping.

• The automation is part of a broad investment in logistics operations at the starting point of fulfilling orders that has helped Nuuly turn a profit for the second time in its five-year existence.

• Warehouses fulfilling traditional online apparel orders typically pick, pack and ship clothes that are folded flat in identical plastic bags, or polybags. Rental businesses instead have to handle, wash and repair each garment individually. Rental companies also cover the cost of shipping orders both to customers and back to their warehouses, rather than only mailing the order to the customer.

• Rent the Runway, a pioneer of the clothing-rental business that started lending clothes to customers in 2009 (and I was their 5th employee!), lost $22 million in the quarter ended April 30 compared with a net loss of $30 million a year earlier.

• Rent the Runwaycompany had about 135,900 average active subscribers in the quarter, roughly flat with a year earlier. Nuuly’s customer base grew to about 250,800 average active subscribers in the latest quarter, up 55% from a year earlier.

E-Commerce Alone Keeps Retail Sales Growing (link)

• Based on the Department of Commerce data, e-commerce spending in the U.S. was up 6.5% in the second quarter. Total retail sales were up 1.9%. However, retail sales without e-commerce — brick-and-mortar sales in physical stores — were up just 1%. Because offline retail was up 1% while e-commerce grew 6.5%, e-commerce accounted for $17.4 billion of the $31.4 billion in additional retail spending.

• E-commerce remains a small part of retail — 16% of total retail or 22% of core retail as of the second quarter — but has lately contributed more than its share. Over the past four quarters, e-commerce drove 53% of growth. In the past, it was closer to 30%.

• E-commerce growth is slow because total retail growth is weak, but online shopping is outselling the rest. It should hit $1.2 trillion in 2024 (it reached $1.1 trillion in 2023), but the mid-teen growth seen for a decade before 2020 seems unachievable.

Tariffs Are on the Table for U.S. Importers, Whatever the Election Outcome (link)

• U.S. companies are pulling away from China as Democrats and Republicans increasingly impose duties on Beijing.

• Tariffs are becoming an entrenched tool tying together geopolitics and trade, and they are playing a bigger role in long-term manufacturing and sourcing decisions. Nowhere are they hitting harder than in China, where importers and exporters are navigating an increasingly complicated regime of levies on goods ranging from semiconductors to mattresses.

• Trump has said he would roll out new tariffs with a potential 10% across-the-board duty on imported goods and a 60% tariff on goods from China. Harris, meanwhile, so far hasn’t indicated a desire to deviate much from President Biden’s trade policies. At a recent campaign event she said Trump’s proposed universal 10% tariff “would increase the cost of everyday expenses for families.” She didn’t criticize current tariffs on Chinese goods.

• Retail industry trade groups and some executives warn some items can’t be produced anywhere else in the world and that escalating tariffs will simply raise consumer prices and fuel inflation. Analysts at Goldman Sachs estimate that every percentage point increase in the overall U.S. tariff rate would increase core consumer prices by just over 0.1%.

Enjoy your long weekend!

- Matt

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