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Welcome back to CrossDock,
There's a big deal happening at Amazon. In fact, there are two. The online retail giant has unveiled the second Prime Day event of 2023 and is calling the fall sales event "Prime Big Deal Days." Launched in 2015 to commemorate Amazon's 20th anniversary, Prime Day events have rapidly evolved into the company's most significant annual shopping extravaganza. But the current Prime Day events are happening at a time when Amazon is facing the biggest antitrust lawsuit since its inception. In this issue of CrossDock, we cover both these landmark events in detail. Keep reading to know more.
In this newsletter:
- Amazon Kicks Off Prime Big Deal Days
- Walmart Experiments with Generative AI for Shopping
- U.S. Federal Trade Commission Sues Amazon
- ShipBob Partners With TikTok for "Fulfilled by TikTok"
- DHL Express Announces 5.9% Rate Increase for 2024
- U.S. Warehouse Boom Continues
- Slow Holiday Season Predictions Affects Seasonal Hiring
- Flexport to Layoff 30 Percent of Its Workforce
Retail and E-commerce🛍️
Amazon Kicks Off Prime Big Deal Days
Amazon's fall sales event, Prime Big Deal Days, kicked off earlier this week. The Prime Big Deal Day is the second marquee event the e-commerce giant rolled out this year – the first Prime Day happened in July.
Inception and growth
First introduced in 2015, Amazon Prime Day is an annual shopping event and has garnered the reputation of being the year's biggest shopping day. Over the years, Amazon Prime Day has evolved from a one-day sales event into an annual shopping extravaganza spanning two days.
During the July 2023 Prime Day event, the e-commerce giant experienced record-breaking sales in the U.S. The July 2023 Prime Day event was the biggest in sales – Prime Day sales touched $12.9 billion – since its introduction in 2015. Furthermore, the first day of Prime Day was the single largest sales day ever on Amazon.
Why a second Prime Day again?
This is the second year in a row the online retailer hosted a fall sales event. According to reports, Amazon is hosting the second Prime Day event to boost its annual retail sales performance, which had a lackluster year till now.
Secondly, the Prime Day event will clear out Amazon inventories before the holiday season sales to accommodate increased inventories from third-party sellers. Finally, this event is part of Amazon's strategy to bring a large chunk of its customer base into the Amazon Prime fold. Rival retailers, including Walmart and Kohl's, are hosting their own sales events this week.
Prime Membership Growth
Credit: Statista
Amazon Prime Day sales have been rising gradually year after year. In 2023, sales during the event reached a new record high, amounting to 12.9 billion U.S. dollars, most of which came from the United States.
Walmart Improves Search and Shopping Experiences Using Generative AI
After introducing a generative AI tool for its employees, Walmart is now extending this technology to its customers. The retail giant is experimenting with generative AI to help shoppers in all stages of the shopping experience, from the search and discovery phase to making a purchase.
New features
The upcoming features include a shopping assistant, generative AI-driven search capabilities, and an interior design tool to enhance the overall shopping experience.
The new shopping assistant will give customers a more interactive and conversational experience, provide personalized product suggestions, and share detailed information about a specific product.
Similarly, users can enter specific questions directly in the search bar. With generative AI, Walmart’s search tool can understand the context and generate a collection of items relevant to the query.
U.S. Federal Trade Commission Sues Amazon
In a landmark lawsuit, the Federal Trade Commission (FTC) and 17 state attorneys general have sued Amazon, alleging that the e-commerce giant has abused its monopoly power to harm consumers and sellers alike.
Anticompetitive tactics
The FTC lawsuit accuses Amazon of using a variety of anticompetitive tactics, including:
- Favoring its own products and services over those of rivals
- Pressuring sellers to keep prices high
- Using its market power to extract unfair fees from sellers
The FTC alleges that Amazon's anticompetitive conduct has led to higher prices for consumers, less innovation, and fewer choices for sellers. Amazon has denied the allegations in the lawsuit, calling them "baseless" and "harmful to consumers."
Implications of lawsuit
The FTC's lawsuit against Amazon has the potential to have a significant impact on both consumers and businesses. Experts believe the lawsuit could lead to lower prices and more online shopping choices. The lawsuit could also make it easier for businesses to sell products on Amazon's platform.
ShipBob Partners With TikTok for "Fulfilled by TikTok"
Social video platform TikTok has partnered with multiple companies to enhance its fulfillment operations in the United States. These collaborators consist of third-party logistics providers like ShipBob and Flowspace and the fulfillment division of the online electronics retailer Newegg, among others.
ShipBob partners with TikTok
Those using TikTok Shop, including brands, sellers, and creators, can take advantage of ShipBob's AI-powered fulfillment engine and its extensive network of fulfillment centers. In short, when customers place an order with a participating seller on TikTok Shop, the order is picked, packed, and shipped by ShipBob.
According to ShipBob, since the solution was made available for testing earlier this year, ShipBob has already fulfilled hundreds of thousands of orders through its integration with TikTok Shop.
Freight and Shipping 🚢
DHL Express Announces 5.9% Rate Increase for 2024
DHL Express announced a 5.9% general rate increase (GRI) – matching FedEx and UPS’s price rise – for its air freight business in the United States, set to take effect from January 1, 2024.
A modest increase
This adjustment represents a more modest increase compared to the 7.9% hike imposed this year. DHL justifies these rate adjustments to account for inflation, currency fluctuations, and costs linked to regulatory and security measures.
Furthermore, like FedEx, DHL has an opportunity this holiday season to capture packages that UPS may have lost when customers switched their business to competitors amid the threat of a summer strike.
Ray of hope
Despite the challenging quarter with a 16.3 percent revenue drop, DHL anticipates a more favorable holiday season and has raised its 2023 profit guidance range. The company now sees its annual operating profit at $6.5 billion to $7.3 billion, up from $6.3 billion to $7.3 billion.
Warehousing 🏭
U.S. Warehouse Boom Continues, Chicago and Dallas Markets Lead the Way
Despite growing economic headwinds, the demand for warehousing and distribution centers in the U.S. continues to rise, driven by higher inventory levels and changing distribution needs.
Lineage and Ryder expand
Lineage Logistics recently announced the opening of a 343,250-square-foot facility in Lancaster, Texas, near Dallas, a market benefiting from strong cross-border trade with Mexico. According to the Journal of Commerce, Lineage's recent purchase of eight cold storage facilities gives it nearly 1.3 million additional square feet of capacity in Florida, Georgia, Oklahoma, Delaware, Maryland, and Wisconsin.
Similarly, Ryder Systems announced a new 400,000-square-foot distribution center in Aurora, Ill., on the outskirts of Chicago. The expansion of warehousing and distribution space by Lineage Logistics and Ryder System in major markets highlights the persistent demand for such facilities.
Domino effect
Interestingly, other companies are also building a bigger distribution presence in Chicago, with Amazon planning to open a 290,000-square-foot distribution facility in the city's West Humboldt Park neighborhood this month.
Warehouse demand is still strong
However, the overall demand for U.S. distribution space is lower than in 2022, but vacancy rates are still low, keeping pressure on rents and leasing costs. Markets such as the Midwest and the South, including Texas, remain strong, reported the Journal of Commerce.
Holiday Shopping 🛒
Slow Holiday Season Predictions Affects Seasonal Hiring
Retailers are showing caution in their holiday hiring plans this year owing to slow holiday season shopping predictions. With concerns about consumer spending and increased financial strain, several major retailers are hiring fewer seasonal workers than in previous years.
Dwindling seasonal hires
Macy’s will hire fewer holiday workers this year at over 38,000 compared to last year’s 41,000. Dick’s Sporting Goods is hiring 8,600 workers compared to the previous year’s 9,000 and 2021’s 10,000 figures. Meanwhile, Target will be hiring 100,000 workers again this year.
Major retailers like Walmart and Party City have yet to reveal their holiday hiring plans. Interestingly, e-commerce giant Amazon announced that it will be hiring 250,000 workers this holiday season.
Waiting game
“Retailers aren’t ready to commit fully to the number of employees they are planning to hire for holidays,” said Rachel Dalton, head of retail insights at Kantar to Modern Retail. “I think they’re waiting to see over the next number of weeks what the demand will look like from consumers before they fully commit,” she added.
Number Spotlight
$221.8 billion
Is the expected U.S. online holiday sales for this holiday shopping season (Nov. 1 to Dec. 31) according to Adobe Analytics. This is a 4.8% growth from last year’s sales of $211.7 billion.
Corporate Development 🏢
Flexport to Layoff 30 Percent of Its Workforce
U.S. logistics startup Flexport plans to lay off up to 30% of its workforce by the end of the month following a change of CEO in September, according to a Reuters report.
Effects of layoff
The layoff could affect up to about 1,000 people based on a total headcount of around 3,300, the sources said, adding the number has not been finalized. According to the Wall Street Journal, the decision was taken by Flexport founder Ryan Petersen to return it to profitability.
Change of guard
Flexport recently experienced significant leadership changes, including the abrupt return of CEO and founder Ryan Petersen, who removed the previous CEO, Dave Clark. The once-profitable company is now grappling with reduced shipping volumes and deteriorating freight rates, which have negatively impacted the company's earnings this year.
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