CrossDock | October 2022

Welcome to the October edition of CrossDock, our monthly newsletter, where we bring you the latest stories and insights from the e-commerce, warehousing, supply chain, and logistics domains.

The e-commerce industry is facing tremendous challenges before it can eventually get back on track due to the widely anticipated global recession and subsequent surges in inflation.

Although overall retail is still robust, the impact of inflation on consumer spending and the resurgence of in-store shopping means that e-commerce companies are compelled to compete for a larger share of a smaller, cluttered, and unpredictable pie.

Due to overestimation in demand forecasting, inventories are piling up causing slower supply chain processes. This edition will unfold the ways e-commerce retailers and 3PL providers are taking to handle the holiday season in this global recession and how they are avoiding the perils of slowing demand.

In this newsletter:

1. Walmart GoLocal now has more than 5,000 delivery points, surpassing its target
2. Retailers face a high-stake holiday season this year
3. Analysts claim that Amazon's October Prime Day attempt was unsuccessful
4. TikTok intends to launch warehouses in the U.S
5. In a pilot operation, food delivery robots will traverse Chicago
6. A $25 billion supermarket merger between Kroger and Albertsons may encounter obstacles

Walmart's GoLocal now has more than 5,000 delivery points, surpassing its target

Walmart GoLocal is offering white-label delivery services from 5000 businesses and retail locations that outpaced its year-end projection. The key USP of this achievement is the stability and maturity of Walmart when compared to other on-demand delivery services.

About GoLocal’s Delivery Service:

By surpassing 1 million deliveries, GoLocal has multiple client bases such as Local Express and The Home Depot. The company focuses on providing clients with a consistent, trustworthy, and reliable experience.

The coverage area of GoLocal is related to Walmart's retail footprint - more than 90% of the US population is located within a 10-mile radius of a Walmart store.

Moreover, GoLocal uses Walmart's Spark Driver Platform, which is a competitive advantage. Its expansion is driven by the increased consumer interest in local deliveries.

Future Plans:

VP of GoLocal, Harsit Patel, stated that they are planning to roll out processes that will be accessible to various local e-commerce firms. It will also continue to expand its delivery-as-a-service double within two years. The company will partner with category leaders and intensify its delivery route density while minimizing shipping costs.

Retailers face a High-Stake Holiday season this year

Global retailers like Walmart, Kohl’s, Amazon, and Target have already started their sales events for the holiday season. This year will be a high-stakes peak season for retailers, as they will be racing to meet customer expectations over inflation and the economy.

E-commerce slowdown during the 2022 Peak season:

As per U.S Census Bureau’s latest data, the inventory level of general merchandise retailers like Nike was 30% higher in July than the previous year because of delays in the supply chain. Nike is planning to clear its excess inventory leading to store stocks per season.

The only relief for the retailers this peak season is lesser shipping costs and delays. Goldman Sachs' report claim that ocean container rates were down in September by up to 80% compared to last year.

However, these costs will go further down as Big-box retailers like Walmart might keep costs down this holiday season due to seasonal hires.

Ways Retailers are Dealing Peak Season:

While global retail giants such as Nike, Walmart, and Target may survive the holiday season, other retailers might be reckoning this holiday season.

Bed Bath & Beyond and Kohl’s plan to offer generous discounts to bring back dissatisfied customers and clear their excess inventory.

Gap is entering the holiday season while being rock-bottom in cash reserves since 2001.

Analysts claim that Amazon's October Prime Day attempt was unsuccessful

The latest Prime Early Access Sale on Amazon didn’t earn the expected revenue and social media buzz compared to the last summer sale bonanzas in July. The July event was the biggest Prime Day Sale so far, with consumers purchasing more than 300 million products.

About the October Prime Day Sale Event:

This October, 15 countries witnessed this shopping blitz among 200 million Prime members. After overwhelming sales in 2020, Amazon has moved the Prime Day event from summer to October. In 2020, Prime members saved more than $1.4 billion while taking advantage of deep discounts and incredible deals.

Consumer Intelligence Research Partner estimates that Amazon will have 172 million Prime members in the U.S. Since 2020, Amazon has shifted Prime day to October, and the third-party sellers witnessed $3.5 billion.

The latest Prime Early Access Sale on Amazon didn’t earn the expected revenue and social media buzz compared to the last summer sale bonanzas in July.

Failure of October Prime Day Sale Event:

Consumers continue to use this Prime Day Sale Event to stock up on essential items rather than focusing on buying gift items for the holiday season. Inflation in the U.S economy determines the purchasing behavior of consumers.

Approx 10 million Prime members have shopped 100 million products from non-Amazon brands. Compared to July’s event, the October event has witnessed 40% fewer sales of household items which determines its failure. The average order prices in this event have dropped to $46.68, which was $60.29 last event.

The cause of this failure is retailers are bracing for lackluster peak season that compels them to provide huge discounts for clearing excess inventory. They are also experiencing supply chain disruptions due to increased fuel costs leading to excess inventory. Consumers are cutting costs due to less disposable income due to higher fuel and food costs.

TikTok intends to launch warehouse networks in the US

With more than 1 billion monthly active users, TikTok wants to create its own e-commerce supply chain network that can be a serious menace to Amazon’s hegemony. TikTok is planning to launch warehouses to create a logistics and warehouse network in the United States as a part of business and revenue growth.

About TikTok Shop:

At present, TikTok has a shopping option known as TikTok Shop in the UK and Southeast Asia markets. TikTok Shop lets merchants and content creators sell their products using their platform. It uses Shopify’s platform to enable users to buy directly from the app. The logistical support will enhance the e-commerce customer experience for its users and ensure sustainable and faster growth of TikTok Shop.

About TikTok Warehouse Operations:

TikTok’s warehousing operations include custom clearings, international warehousing, and supply chain systems by supporting domestic e-commerce efforts in the U.S along with cross-border e-commerce efforts.

With newly added warehousing operations, customer service returns, and delivery services, sellers can enhance their efficiency and operational capabilities. It also led the buyers to have a consistent shopping experience.

Details:

Eventually, the systems will perform parcel consolidation, transporting orders from one stage to the next and managing free returns. The latest job opening reported by Axios states that TikTok aims to provide logistical support across UK and SEA markets by providing a wide range of products and delivery services.

In a pilot operation, food delivery robots will traverse Chicago

Chicago is now gearing up for sidewalk food delivery bots, post approval of the pilot program by the city council. These food delivery robots will operate within a small radius especially on the sidewalks and within crosswalks.

About Delivery Device Pilot Program:

This delivery device pilot program originated with the University of Illinois Chicago and Starship. Under this program, tech companies can apply for Emerging Business Permits. The objective of the pilot program is to provide businesses with a new opportunity to test new delivery options.

These robots are app-based and make deliveries from grocery stores and restaurants within a smaller radius. Customers can download the app and can order food by putting the precise location, which should be within the geo-fence boundaries.

Under the pilot program, personal delivery device firms will partner with local food vendors as a courier service to deliver food using robots. This 2-year pilot program will make Chicago competitive in the emerging market by using advanced technologies, such as robots for food delivery.

Theft Alert System of the Device:

Amanda Howell from the University of Oregon pointed out vandalism, the most predominant concern for these delivery robots. These robots weigh around 75 pounds, and when picked up, they emit anti-theft sirens.

Also, these robots have cameras and securely locked lids. Geographical tracking technology in these bots helps the company to know the location. It also sends a notification if anyone picks up the device.

Future of sidewalk delivery robots:

However, sidewalk delivery robots need more pilot programs to perfect the operating model technology. The city council stated that a mid-pilot assessment is needed for the alteration of the 2-year pilot program.

A $25 billion supermarket merger between Kroger and Albertsons may encounter obstacles

The $24.6 billion merger between Kroger and Albertsons would face intense scrutiny as they might alter the food retail landscape.

Impact on Grocery Market:

The deal will limit the choices of shoppers for grocery shopping, especially in rural areas. It could be a challenge for independent grocery retailers and consumers, leading to higher prices. Post-merger, the combined entity along with Walmart, will control more than 70% market across 167 cities in the U.S.

The largest grocery retailers use their size to negotiate with suppliers and producers for better pricing. When big retailers squeeze suppliers to collect products at lower prices, they charge more to independent grocery stores.

Kroger and Albertsons are known for their inflated food prices. Food prices across the U.S increased by 11% from last year. Inflation has molded consumers’ shopping habits, as they are shifting towards cheaper alternatives like Walmart.

FTC Challenges:

The pitch of this merger to compete against Walmart, Amazon, and Costco has not convinced the Federal Trade Commission. By consulting with suppliers, competitors, and consumer advocates, FTC will look at whether Kroger has lowered the prices of its products as promised.

It is creating political pressure on FTC which leads to strong regulatory scrutiny, as inflation has created a global food security crisis. This deal will result in employee layoffs, inflated prices, and weak supply chains.

FTC expressed that these deals create real competition against the new company. Earlier, FTC has already blocked six mergers. Big retailers tend to create issues for small vendors and consumers in terms of prices.

Thank you for reading! We’ll see you in the next edition of CrossDock.