Welcome to the November edition of CrossDock, our monthly newsletter, where we bring you the latest stories and insights from retail, e-commerce fulfillment, and warehousing.
A global e-commerce slowdown is predominant as inflation is impacting the spending habits of consumers. While inflation and recession are around the corner, no one is accurately gauging the future of e-commerce.
We talked in detail about how e-commerce is experiencing a slowdown globally in our previous edition. The e-commerce activity, although falling short of the growth predictions and the explosion seen during the pandemic, continues to play a major role in the retail and commerce landscape.
Black Friday has set a new record for sales this year. At the same time, Amazon’s adoption of new robots and Macy’s mini distribution network for inventory management is a testament to how e-commerce has become an important pillar in the economy and how it continues to challenge retailers to meet the growing demand.
In this newsletter:
- CEO of Amazon anticipates further layoffs in 2023
- Macy’s plans to open mini distribution centers within 35 stores
- Shopify and Deliverr begin integrating their fulfillment networks
- Amazon tests a new robotic technology to increase warehouse productivity
- Black Friday online sales set a new record of $9 billion
CEO of Amazon anticipates further layoffs in 2023
Amazon confirmed that there will be more layoffs in 2023 as the leaders are trying to make adjustments internally. However, the CEO of Amazon Andy Jassy didn’t specify the exact number of reduction of roles, which leaves employees wondering if they would have jobless in the upcoming months.
About the layoff
The job cuts at Amazon this year are fueled by the economic downturn of the world. In 2001, the company laid off 1500 employees i.e. 15% of the staff in the wake of the dotcom crash amid the U.S. recession. This year Amazon has already laid off more than 10,000 employees.
But this layoff will be the largest in Amazon’s history in the organization’s Alexa voice assistant division. This department had lost $5 billion approx annually in recent years. Amazon has also extended voluntary buyouts to the HR department including recruiters, talent acquisition officers, and software engineers.
Ways Amazon is communicating the layoff
The company plans to prioritize direct communication with the impacted employees before making an internal announcement. Also, Amazon tries to fit those employees into other roles, if not, then severance packages are offered to them. For employees who are opting for voluntary walk away Amazon is paying them 3 months of salary plus one of pay for every 6 months of tenure at the organization.
Macy’s plans to open mini distribution centers within 35 stores
Macy’s is planning to utilize the space of its 35 stores to open mini distribution centers to handle the extra influx of the peak season. It will create more space and capacity for the fulfillment upstream.
About the mini distribution center
Macy’s has already maintained stringent inventory management in a way that it can accommodate more items if demand calls. It provides liquidity and flexibility to the items purchased by customers at every touch point.
Macy’s Q3 inventory levels were 12% lower than in 2019. While other retailers like Gap have preferred to pack and hold excess inventory for selling at later date, Macy’s is focusing on clearing inventory to avoid mess during the peak season.
Benefits of mini distribution center
A million square feet of retail space have been transformed to serve as fulfillment services. By putting its distribution network closer to customers, Macy's will be able to better meet demand. It includes keeping a laser-like eye on consumer demand to guide decisions about operations and procurement.
The semi-automated mini-distribution centers are designed to cut shipping costs, expedite delivery, and lessen the need for split shipments. They are relatively inexpensive additions to the current fulfillment network.
Shopify and Deliverr begin integrating their fulfillment networks
Shopify integrated its fulfillment networks with Deliverr, an e-commerce fulfillment and order storage provider in July for strengthening its fulfillment network. It will provide the Shopify merchants with an enriched fulfillment network in the phase of growing complexity in e-commerce logistics.
About the Fulfillment Network Integration
Shopify may operate hubs that will take on as much complexity for the rest of the network as possible thanks to the combined network's capacities, which can span a Shopify merchant's whole supply chain. There has already been a significant increase in the number of retailers holding goods at Atlanta's first joint facility.
Shopify will be able to run a small number of regional hubs that perform a variety of tasks, such as cross-docking, multichannel distribution, inventory balancing, and some local fulfillment, thanks to this integrated network.
- 2 out of 3 domestic packages are delivered within 2 business days using Shopify’s fulfillment network.
- 75% YoY growth in merchant inventory that was received at Deliverr cross-docks.
- 80% quarterly growth in merchants using more than one of Shopify's logistics services across all three supply chain phases.
- FMS, Shopify's warehouse management software, has seen a 450% increase in orders filled across both Shopify and partner-run facilities.
Shopify laid off 10% of its employees in July as the spending habits of consumers have cooled off significantly since the pandemic. The company needs to restructure for entering the economic uncertainty as the integration with Deliverr costs $2.1 billion.
Amazon tests new robotic technology ‘Sparrow’ to improve fulfillment and labor efficiency
Amazon’s intelligent robotic system Sparrow detects, selects, and individual objects that aim in making the fulfillment process more efficient.
According to Amazon, Sparrow can manage millions of different products by utilizing machine vision and artificial intelligence. It relocates objects before packaging, freeing up personnel from laborious activities.
Sparrow is anticipated to enhance the network of the company's other devices. After Sparrow has handled and packed products, existing robotic arms like Robin and Cardinal can reroute those items inside the warehouse before shipping.
Amazon’s Robotics Automation Approach
However, the corporation gave automation a higher priority than its more recent problems. A greater robotics presence was introduced in its facilities as a result of the acquisition of Kiva Systems in 2012, which will handle surges in customer demand.
More than 12 different types of robotic systems, totalling more than 520,000 robotic drive units, were present in the company's facilities as of June.
Robotic Technology used by Other Companies
Companies other than Amazon have invested in robotic parcel sorters. The introduction of DoraSorter robotic equipment at an Atlanta distribution center has increased throughput for DHL's e-commerce division. FedEx Express also uses robotic arms at the World Hub in Tennessee, Memphis for handling letters and small items.
Black Friday online sales set a new record of $9 billion
This Black Friday witnessed online sales of $9.12 billion. Overall online sales after Thanksgiving were up by 2.3% YoY. As 48% of online purchases during Black Friday were made on smartphones, up from 44% last year, consumers also break the record for mobile orders.
About the Black Friday Sales
On Black Friday, many customers preferred flexible payment options as they continue to struggle with soaring prices and inflation. Beginning on Nov. 19, Buy Now Pay Later (BNPL) payments surged by 78% when compared to the previous week, while Buy Now Pay Later earnings increased by 81% over the same time.
Product Categories Sold on Black Friday
Forecasts of e-commerce sales
Target, Macy's, Nordstrom, and other stores reported a slowdown in sales in late October and early November, and early Christmas forecasts have been subdued. Spending on Cyber Monday is anticipated to total $11.2 billion this year, up 5.1% from last year.
Thank you for reading! We’ll see you in the next edition of CrossDock.