Blog postsJune 21, 2019
FLEXE Hub: Take a hike
Walmart's autonomous delivery vans, tariff-related price hikes, and the business of sustainability.
Keeping up with the latest store closures, emerging tech, and what Amazon is doing could easily be a full-time job. Luckily for you, it’s ours.
It’s officially summer, and just like the temperatures, the headlines are heating up. In the news this week, we look at:
- Walmart’s autonomous delivery vans
- Tariff-related price hikes
- The businesses serving the “circular economy”
Let’s talk logistics
Going the extra (middle) mile
Walmart is trying out a new approach to ‘middle mile’ delivery. It’s seen huge success with its eCommerce sales—increasing them 40% YOY—but those orders are coming at a cost: “Gross margins were down 21 basis points in 2018.” As a result, Walmart’s looking to its logistics to see where it can save. Enter: Autonomous delivery vans.
Walmart hopes to employ these self-driving vehicles on its routes between warehouses and online-order-pickup kiosks located outside of Walmart stores. These frequently traveled routes don’t require much from the driver, making them a perfect place to test out automation. By implementing this, Walmart could save as much as 50% on its logistics costs for eCommerce orders.
For other retailers hoping to follow in Walmart’s footsteps, stay tuned because the tech is on its way. Walmart is using tech from Gatik AI to power its fleet of Ford vans, but efforts are also being made by Volvo and USPS to automate routine routes.
Warning: Price hikes ahead
Expect to pay more for your next pair of shoes. The latest round of tariffs is causing some serious trouble for retailers and brands. In fact, it's bad enough that J.C. Penney, Macy’s, and many other retailers have reached out to the U.S. Trade Representative hoping to get a number of apparel and footwear products removed from the list set to get the 25% increase.
As it stands now, analysts predict that the tariffs will put “12,000 stores at risk,” cut into “20% to 40% of the operating margin of a wide swath of retailers,” and raise prices by “10% to 21%.” It’s kind of a big deal. Other than pleading with the U.S. Trade Rep to stop this, retailers only have a few options: Eat the cost of the tariffs themselves, pass the costs on to their suppliers, change suppliers, and/or stock up on inventory ahead of the tariffs to buy themselves some time. All come with significant challenges and tradeoffs that will undoubtedly have some effect on their customers.
Via Retail Dive
What goes around comes around
As sustainability becomes a growing concern for consumers, the “circular economy”—supply chain and consumption strategies that focus on recycling and reusing—has emerged as a growing industry, with a number of new businesses that support it cropping up. From repurposed home goods to an online platform for buying and selling used furniture to a television waste recycling business, there’s a real demand for companies that cut down on waste production.
Further proving this is a valid industry, the “circular economy” even has its own venture-capital fund—Closed Loop Ventures. According to the fund’s director and investment officer, Danielle Joseph, “Companies that help businesses and consumers reduce waste will be the economy’s next leaders.” For retailers and brands, this stands as proof that they too need to be looking into their sustainability practices. Not just to serve the planet, but also to serve their bottom lines. There’s a clear desire among consumers to support sustainable business practices, and a clear opening for companies to provide them.
What’s Amazon up to?
Putting the blame on someone else, for once
We all talk about “changing customer behavior” and “increasing customer expectations” but what have we really been saying? According to a recent article by Modern Retail, what we really mean is, “Customers expect so much now and it’s all Amazon’s fault.”
While Amazon has certainly set the bar, they point out that the age of blaming Amazon for the failure of every single retail store is coming to a close. Now that retailers like Target and Walmart have shown that they can successfully clap back with compelling offers of their own—a competing one-day delivery promise from Walmart and same-day shipping from Target—there’s really no excuse.
For retailers who are struggling, it’s not because of Amazon, it’s because of their own “executional and strategic missteps.” During a time when “today’s better-equipped competitors were taking action in areas like e-commerce and logistics as well as experiences and services,” they failed to take the necessary steps to adapt.
Via Modern Retail
FLEXE news & events
Congratulations to FLEXE Co-Founder and CEO: Awarded EY Entrepreneur of the Year Award
Last Friday, FLEXE Co-Founder and CEO, Karl Siebrecht, was awarded the EY Entrepreneur of the Year Award in the Business Services Category for the Pacific Northwest. Obviously an accomplished entrepreneur, Karl is also a tremendous, humble leader, dedicated to building a great product through great teams. You can find out for yourself—he ended his acceptance speech with two words, “We’re hiring.”
See you at the CSCMP EDGE Conference this year?
Come visit FLEXE September 15-18 at the CSCMP EDGE Conference. Our team will be there ready to say hello and our CEO will be on a panel. Don’t miss it.
Oh, we’ll also be at Groceryshop 2019!
Stopping through Las Vegas for Groceryshop 2019? We’ll be there too. Karl will be speaking on September 15 and a few members from our team will be at the event as well. Want to talk? Contact us.
The right delivery promise: How many locations do you need?
All of this talk about same- and next-day shipping got us thinking: Does everyone need to be in the race for the fastest delivery promise? And, does it really require the infrastructure that Amazon, Target, and Walmart have? Find out in the latest blog.
Move fast and don’t break things
Our Co-Founder and CEO, Karl Siebrecht, was interviewed on the Leaders in Supply Chain podcast about how on-demand warehousing is the AWS of logistics, the challenges and rewards of creating a new category, and what greatness means at FLEXE. Check it out here.