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In 2006, Amazon opened its fulfillment and delivery network to independent sellers by creating Fulfillment by Amazon (FBA). Cut to the present day, Amazon's distribution and fulfillment network has grown multifold. Its bouquet of third-party fulfillment, shipping, delivery, and warehousing services is taking the supply chain world by storm. A case in point is its recent end-to-end supply chain solution, "Supply Chain by Amazon," which lets sellers ship products directly from factories — whether it's going to Amazon or not. In this issue of CrossDock, we give you a peek at this new service and how it aligns with Amazon's larger scheme of things, along with other exciting and trending stories from warehousing, commerce, and logistics space.

In this newsletter:

Amazon Announces Supply Chain by Amazon
GXO Logistics Acquires PFSweb
TikTok is gearing up to challenge Amazon and Walmart
Amazon Scraps Plan to Charge Third-party Sellers
FedEx Thrives Amidst Competitors' Struggles
USPS Avoids Holiday Surcharges to Stay Competitive

Supply Chain and Logistics🏭

Amazon Announces Supply Chain by Amazon, Expands its Ecosystem

In its recently concluded annual seller summit, Amazon announced Supply Chain by Amazon, an end-to-end, fully automated set of supply chain services that will provide sellers with a complete solution to quickly and reliably move products directly from their manufacturers to customers worldwide.

Supply Chain by Amazon and Multi-Channel Distribution

The Supply Chain by Amazon is an advancement on its initially introduced Fulfillment by Amazon (FBA) services back in 2006. While FBA tackled fulfillment, the new service will be focused on earlier in the product journey, starting with manufacturing.

As part of this initiative, Amazon unveiled another significant service — Multi-Channel Distribution (MCD), which will allow sellers to move products in bulk from Amazon’s warehouses to other non-Amazon facilities.

“Sellers will be able to offload even more of the complexity of their supply chain logistics to Amazon, both for the products they sell in Amazon’s store and through other sales channels, including online and physical store locations,” said Dharmesh Mehta, Amazon vice president of Worldwide Selling Partner Services.

A holistic supply chain player

Over the years, Amazon has positioned itself as a holistic supply chain player with its plethora of services like Multi-Channel Fulfillment, Amazon Warehousing & Distribution, Buy with Prime, and others.

Corporate Development🏢

PFSweb Acquired by GXO Logistics

Contract logistics leader GXO Logistics Inc. has successfully acquired PFSweb Inc., a global luxury e-commerce goods fulfillment service provider, in an all-cash transaction valued at $181 million. The deal will be finalized in the fourth quarter of 2023.

Under the agreement, a GXO subsidiary will purchase all outstanding shares of PFSweb at a rate of $7.50 per share in cash. Following the completion of the acquisition, PFSweb will cease trading on the Nasdaq Stock Exchange and become an integral division within GXO.

A win-win situation

This acquisition promises to be mutually beneficial. PFSweb is set to leverage GXO's cutting-edge technology and substantial financial resources. Moreover, PFSweb's expertise in direct-to-consumer e-commerce fulfillment for premium brands will become a valuable addition to GXO's operations. Malcolm Wilson, CEO of GXO, remarked, "PFS's platform, vertical expertise, and geographic concentration make it an ideal fit for GXO."

Retail and E-commerce🛍️

TikTok is gearing up to challenge Amazon and Walmart

TikTok is gearing up to bolster its newly launched online marketplace, TikTok Shop, by providing substantial holiday season discounts starting October 27th, according to reports from Bloomberg.

Aim to attract US holiday shoppers

The popular social video platform aims to attract US holiday shoppers by subsidizing discounts of up to 50%. The move is strategically timed to coincide with the massive sales events of November, such as Black Friday and Cyber Monday, when American consumers flock to retailers like Amazon and Walmart for deals.

It's worth noting that TikTok recently launched TikTok Shop in the US, providing fulfillment services for sellers and introducing an affiliate program for content creators.

Amazon Scraps Plan to Charge Third-party Sellers

Amazon has decided to abandon its plan to impose a 2% fee on third-party sellers who manage their own shipping, according to a company spokesperson. The fee, originally set to take effect on October 1st, was aimed at offsetting Amazon's rising costs.

Damage control

The price increase would have made it more expensive for the sellers to ship their products and push them to pick up Amazon's FBA services. However, the e-commerce giant has opted to forgo this fee to prevent any negative impact on seller participation.

FTC lawsuit

This move comes as Amazon faces legal action from the U.S. Federal Trade Commission (FTC) amid ongoing antitrust scrutiny. The FTC recently filed an antitrust lawsuit after the company declined to make concessions to resolve antitrust allegations.

Freight and Shipping 🚢

FedEx Thrives Amidst Competitors' Struggles

FedEx's latest Q1 earnings report presents a favorable outlook, as the transportation giant leveraged the difficulties experienced by competitors UPS and Yellow to its advantage. Furthermore, FedEx has continued to cut costs effectively to match the ongoing softness in global e-commerce demand.

Decline in revenue, increase in operating income

In its first quarter of fiscal 2024, which concluded on Aug. 31, FedEx faced a decline in revenue to $21.7 billion from the previous year's $23.2 billion. However, the company witnessed growth in operating income, rising to $1.49 billion compared to $1.19 billion the previous year.

Notably, net income increased to $1.08 billion, up from $875 million in the previous period.

Gaining from competitors' loss

Analysts attribute this upward trend in numbers to the misfortune of FedEx's rivals – UPS and Yellow. UPS executives last month said customers shifted one million packages per day to other providers, resulting in about $200 million of lost sales. They estimated that roughly a third of that volume landed with FedEx.

Similarly, being one of the biggest players in the less-than-truckload shipping industry, FedEx benefited from Yellow's bankruptcy last month.

USPS Avoids Holiday Surcharges to Stay Competitive

In a move that sets it apart from industry rivals UPS and FedEx, the U.S. Postal Service (USPS) has opted not to levy holiday surcharges on customers this peak season. The move comes as USPS seeks to maintain its competitive edge in the market.

The USPS introduced holiday surcharges in 2020 to offset the surging operational costs driven by the pandemic-induced spike in delivery demand. This year, however, customers will be spared these surcharges for residential area deliveries, Saturday deliveries, and minimum volumes.

Aim to expand market share

Jacqueline Krage Strako, USPS Chief Commerce and Business Solutions Officer characterized this choice as a "competitive advantage." Despite reporting a net loss of $1.7 billion in Q3 and a 0.9% dip in revenue, USPS is choosing alternative methods, such as raising first-class stamp prices, to recoup expenses. This strategic move aligns with USPS's recent launch of the USPS Ground Advantage program, designed to attract e-commerce businesses and expand its market share.

Number Spotlight

410,000

Seasonal jobs will be added in the retail sector this holiday season, as per reports. The recent projection of jobs aligns with the previous years' trend. In the last quarter of 2022, US retailers added 5,19,400 jobs, a 26% decline from the same period in 2021.

Scaling Up the Space

Credit: The Wall Street Journal

According to CBRE, in the second quarter, logistics operators rented approximately 205 million square feet of warehouse space. This figure marked a decline compared to the 235 million square feet leased in the same period the previous year. However, it's important to note that this leasing activity remained notably higher compared to the 135 million square feet leased during the same quarter in 2019.

Thank you for reading, we’ll see you in the next edition!