Tuesday, February 28, 2017

SUPPLY CHAIN MANAGEMENT -- PROCESS, NOT LOGISTICS FUNCTIONS

Supply Chain Management is a process. Focusing on logistics functions, and not the process, creates gaps and performance problems.



STORE CLOSING AND CLICK AND COLLECT

Closing stores exposes a weakness in omnichannel click and collect.



ROBOTICS AND SUPPLY CHAINS

Robotics is a great omnichannel supply chain story. Good visuals. But it does not address the key issue of inventory velocity.




Monday, February 27, 2017

ESTABLISHED FORWARDERS HAVE NOTHING TO FEAR FROM WELL-FUNDED START-UPS

Sounds like the same old.  Correct? Or refusing to recognize what is happening?


Established forwarders have nothing to fear from well-funded start-ups – yet



© Lasse Behnke_logistics 50177162
© Lasse Behnke
Forwarders which create value for shippers and invest in IT will be the ones that survive, delegates heard at Air Cargo Africa in Johannesburg last week.
In a nod to the recent debate between new online platforms and traditional freight forwarders, Marcel Fujike, SVP global air logistics for Kuehne + Nagel, noted that millions of dollars were “being pumped into logistics start-ups in Silicon Valley, which believe they can shake up the industry and do it smarter, better and cheaper”.
But David Logan, CEO of South Africa’s forwarding association SAAFF, argued that knowledge of the industry would set forwarders apart from the market entrants.
“The value-add is that forwarders have to be experts in everything. They know the best rates, which carriers, across all modes – they need a host of knowledge as the architects of transport.”
While much of that knowledge can now be gleaned through IT, the new forwarders do not yet have global platforms and, added Mr Fujike, could be divided into four categories.
“The majority of the start-ups are on the pricing side; others are trying to consolidate freight; others are more on the facilitation side, such as easier documentation flow; and then there are virtual forwarders.
“We take start-ups seriously – and they have a lot of good ideas and a lot of money. But they lack execution and global reach. In the end, time will tell whether they can do this or not.


“It’s all virtual, but we physically move goods. Sooner or later cargo gets stuck and who can you talk to? That’s the hurdle for these guys.
“We have to watch them and take them seriously, but we don’t see them as an immediate threat.”
Kale Logistics director Vineet Malhotra added that they would be able to disrupt “just a small part” of the market – but said forwarders should invest in IT.
Turhan Ozen, chief cargo officer for Turkish Airlines, agreed: “They won’t fully and drastically change the supply chain from our perspective. They are picking [parts of the supply chain], and will only pick those that are vital to invest in. When they grow further, they will see it will only work with one model, or in one market.”
Amazon and Alibaba were a different category of disruptor, however. Mr Malhotra questioned whether Amazon’s ambitions in logistics were for its business, or as a business.
“It is on both sides of the supply chain – it has already done first-mile, last-mile and warehousing. The element that has been left out is international transport – so it looks like the most logical thing to so.”
Georges Biwer, vice president EMEA for AirBridgeCargo, laughed: “I can only invite Amazon into the airline business – they’ll find out what it will cost them.”
he added: “Alibaba is becoming a giant but I don’t think there is any need to be afraid of it. E-commerce is general cargo and you can choose a mode of shipping, using forwarders or integrators.”
Airlines, meanwhile, urged better partnerships with forwarders and shippers.
“I think the lines should be closer to shippers – not to replace forwarders but to understand the dynamics,” said Mr Ozen. “When forwarders act as partners they start to orchestrate on behalf of shippers.
“A real partnership is needed to continuously provide value-added solutions for shippers.”
Jonathan Clark, regional director Africa for Cargolux, agreed. “We want to be closer to the shipper. It’s important for us to understand the way the markets will go.
” We have to learn a lot more from shippers so we can tailor our services. It’s up to us to learn and see how we can add value. We’re all in this together.”

Saturday, February 25, 2017

LATEST ON CONTAINER RATES FOR ASIA-EUROPE AND THE TRANSPACIFIC

Transpacific box carriers see new threat on the horizon as rates tumble

dreamstime_s_33452767
Container spot rates on the Asia-Europe trade held firm this week, but carriers are likely to be concerned by a decline on eastbound transpacific rates.
Today’s Shanghai Containerized Freight Index (SCFI) recorded an increase of 7.3% for spot rates to North Europe to $921 per teu and a 4.5% uplift for Mediterranean ports to $882 per teu.
According to Patrik Berglund, chief executive of ocean freight pricing platform Xeneta, the average rates of contracts being agreed with carriers is “substantially higher” than last year, at $1,974 per 40ft compared with a figure below $1,000 12 months ago.
Mr Berglund told The Loadstar today long-term Asia-Europe contract rate levels currently being agreed were “pulling the market up”, which could eventually see freight rates on the route return to 2014 levels of some $3,000 per 40ft.
And carriers are also substantially pushing up freight rates on the eastbound backhaul legs to Asia as space tightens, partly due to the blanking of westbound sailings during and immediately after Chinese New Year.
Indeed, this week Maersk Line published new FAK [freight all kinds] rates from North Europe to Asia, effective 15 March, that are actually higher than the carrier’s westbound rates.
Maersk’s FAK rates from Shanghai to Felixstowe will be $1,100 per 20ft and $2,000 per 40ft; whereas in the reverse direction, $1,280 per 20ft and $1,600 per 40ft. Furthermore, its backhaul rate on the same route for the normally low-rated wastepaper and plastic scrap is even higher, at $2,125 per 40ft.
The Loadstar has heard complaints from some UK shippers that they are struggling to get export space, and at the same time their rates are being pushed up. This has all the hallmarks of developing into a similar situation to that of 2013’s “eastbound capacity crunch”, when carriers imposed a three-month eastbound “booking stop” after cancelled westbound sailings reduced backhaul capacity.
Container lines also hiked rates considerably during that period, prompting complaints from shippers that they were being held to ransom.
Meanwhile, Asia-US carriers are seeing a worrying fall in spot rates on the transpacific trade. For the third week running, the SCFI recorded a significant drop in spot rates on the route.
This week rates for the US west coast declined by 6.8% to $1,650 per 40ft, while for east coast, ports rates were down by 4.9% to $3,055 per 40ft.
Although spot rates are still much healthier than a year ago, as the contract season begins US shippers may feel that they should defer signing new deals for as long as the spot rates continue to fall.
Anecdotal reports suggest that the launch of HMM’s standalone service in April, Hanjin successor SM Lines’ new service in the same month and the new Zim loop are exerting pressure on spot rates for the route.
Mr Berglund warned that established carriers could not afford to be complacent and should be on the lookout for the potential threat from “new or daring liners”.

Friday, February 24, 2017

STRUGGLING RETAILERS AND WEAK OMNICHANNEL

Is it a coincidence that retailers with weak omncihannel programs are struggling so much with sales?




Thursday, February 23, 2017

UPSTREAM SUPPLY CHAIN

Upstream supply chain issues are the most important and intensify across the supply chain.




Tuesday, February 21, 2017

INTERNATIONAL TRADE--MARGINS

Many in international trade try to make their profits by squeezing transport instead of with their products. Agree?




OMNICHANNEL RETAIL DUALITY

Omnichannel is retail duality driven by supply chain duality. Many retailers struggle with this and the needed transformations.




Monday, February 20, 2017

OMNICHANNEL SUPPLY CHAIN AND INVENTORY

Many omnichannel issues start with the store supply chain with inventory visibility and velocity--and not transforming their supply chains.




DEUTSCHE POST DHL AND HUAWEI PARTNER ON IoT

Important and interesting. What will competitors do?


Huawei and Deutsche Post DHL agree IoT partnership

Thursday, February 16th, 2017
Huawei Technologies and Deutsche Post DHL Group have signed a Memorandum of Understanding (MOU) to develop a range of supply chain solutions for customers using industrial-grade Internet of Things (IoT) hardware and infrastructure.
Under the MOU, Huawei and Deutsche Post DHL Group will collaborate on innovation projects focusing on cellular-based IoT technology, which can connect large volumes of devices across long distances with minimal power consumption.
According to Deutsche Post DHL: “The greater connectivity can deliver a more integrated logistics value chain by providing critical data and visibility in warehousing operations, freight transportation, and last-mile delivery.”
Dr. Markus Voss, Global COO & CIO, DHL Supply Chain, said: “Spending on connected logistics solutions is expected to more than double between now and 2020, and many logistics providers including Deutsche Post DHL Group have already begun to explore Internet of Things applications in their supply chains, including everything from enhanced asset tracking to driverless delivery vehicles.
“This MOU will allow both Huawei and Deutsche Post DHL Group to tackle complex operational and business challenges with a powerful combination of world-class Internet of Things hardware, networks, and expertise in end-to-end supply chain management.”
The MOU will see Huawei make its IoT devices, connectivity experts, and network infrastructure accessible to Deutsche Post DHL Group, so the logistics company use them in its warehousing, freight, and last-mile delivery services.
Huawei and Deutsche Post DHL Group will also work together to market and commercialize the results of their innovations, including pilot commercial projects in Europe and China.
Deutsche Post DHL added: “The initial forays into the Internet of Things for DHL include the launch of the €90 million Advanced Regional Center in Singapore last year, featuring almost-entirely automated picking and storing infrastructure that performs 20 per cent more efficiently than manual approaches.”
Source: Deutsche Post DHL

Friday, February 17, 2017

SUPPLY CHAINS AND PERFORMANCE

Supply Chains are about performance. Cost comes second. Many firms struggle because they put 2 ahead of 1. Ask their customers.




Wednesday, February 15, 2017

ALIBABA SIGNS WITH CMA CGM FOR ONLINE BOOKING

Now CMA CGM signs with Alibaba for online booking of container space


CMA-CGM-Marco-Polo_PortKelang_2012-11-19-5
CMA CGM has followed Maersk’s lead, signing a memorandum of understanding (MoU) with the world’s largest e-commerce platform Alibaba.
The agreement is for container space on its Asia-Mediterranean and Asia-Adriatic services, booked via Alibaba’s OneTouch platform.
The service will allow Chinese exporters to bypass freight forwarders, using OneTouch to book space on CMA CGM’s MEX 1 service, which connects the Chinese export gateways of Qingdao, Shanghai, Ningbo and Yantian with the Med gateways of Barcelona and Valencia and CMA CGM’s transhipment hub at Malta, and the Asia-Bosporus BEX service connecting Shanghai, Ningbo and Chiwan with the Adriatic gateways of Rijeka, Koper, Trieste and Venice.
OneTouch also offers import and export services such as customs clearance and logistics, as well as air freight and express booking.
The development could well add renewed fuel to the debate about the digitisation of shipping and the potential threat of e-commerce platforms to traditional freight service providers.
“For CMA CGM, it is one step ahead to create added value to its customers and to make the industry meet the digital world,” a statement from the line said.

Tuesday, February 14, 2017

THE OMNICHANNEL SUPPLY CHAIN

The successful omnichannel supply chain has time compression and inventory velocity.



Monday, February 13, 2017

DRONES FOR WAREHOUSES BEING DEVELOPED

Flying warehouse drones are in the works by Singapore's Infinium Robotics

A flying drone could soon take inventory in a warehouse--and possibly someone's job--as Singapore-based Infinium Robotics works to carve a niche in the drone market by developing a flying warehouse robot.
The company got its start coordinating drones for aerial displays and later attempted to apply drone technology use in food service, although this proved to be challenging. Today, Infinium focuses on providing robotics solutions in the warehouse and logistics sector.
"We are focused on indoor applications (for) very practical purposes because for outdoor applications, we have to deal with regulations. We have to deal with issues like privacy as well (but) if you fly drones indoors, you do away with all these issues," Junyang Woon, founder and CEO of Infinium Robotics, tells CNBC's "Managing Asia."
Infinium Robotics
"We are looking into fully replacing the manpower needed to do stocktaking," Woon says, "Let's say warehouse workers leave work, you press a button and the drone will do the stocktaking. When the workers come back in the morning, all the stock would be taken before they actually start work."
The former Republic of Singapore Navy officer became fascinated by drone technology after seeing how it was used in the military domain and wanted to explore how these solutions could be used in the commercial domain.
Although indoor drone applications allow users to bypass regulations, they create their fair share of challenges too.
As Infinium's warehouse drones operate indoors -- where GPS signals are weaker -- the company had to commit additional investments to develop positioning technology to improve indoor navigation.
The company's drones are currently being tested in warehouses around Singapore and Woon says they intend to roll out the solution by mid-2017.
The technology will help warehouses save on costs related to inventory that would have otherwise been written off each year. "You're talking about hundreds of millions or trillions of cost savings for this entire industry," Woon says, adding that adopting the use of drones is a "very natural step" that makes businesses more efficient.
For now, the start-up is based in its home market. Woon says Infinium will be using Singapore as a springboard to the rest of the world, due to the city-state's reputation for being a logistics and distribution hub for MNCs.
"We're trying to beat everyone," Woon says of his competitors, "And so far, we have a drone that is fully autonomous indoors in warehouse(s)."

2M ALLIANCE BEEFS UP ASIA-EUROPE AND TRANSPACIFIC SERVICES

2M beefs up east-west tradelane offerings ahead of new alliance launch

Antwerp_MSC
Seven weeks before two rival mega east-west alliances are set to launch, 2M alliance partners Maersk Line and MSC have launched an aggressive capacity hike on the two biggest tradelanes.
On 1 April, the date for the launch of the new Ocean and THE alliance networks, 2M will introduce a new loop between Asia and North Europe [dubbed AE7 by Maersk] calling at Ningbo and Shanghai in China, Tanjung Pelepas, in Malaysia, and Rotterdam, Hamburg, Bremerhaven, Wilhelmshaven and Felixstowe in North Europe.
And, on the same date, the 2M will launch a new transpacific service, which Maersk calls TP16, between Asia and the US east coast [via the Panama Canal], calling Hong Kong, Yantian, Shanghai and Busan in Asia, and Savannah, Norfolk, Charleston and Miami on the US east and Gulf coasts.
Silvia Ding, head of trade at Maersk Line, said: “Our new slot agreements [with Hyundai Merchant Marine (HMM) and Hamburg Sud] require that we increase our capacity. With these service improvements we are adding the necessary capacity to match the increase in volumes.”
MSC said the service revisions “follow an unprecedented year in the liner industry, which saw considerable change to the composition of alliances and commercial structures, including significant mergers and acquisitions”.
It added that all the vessels deployed on the new services, no details yet advised, would be “operated exclusively by MSC and Maersk Line”, confirming that HMM will be only a slot charterer between Asia and North Europe after it exits the G6 alliance.
After the announcement of a “strategic cooperation agreement” between the 2M and HMM in December, Maersk and MSC shippers expressed their concern that their cargo could be loaded onto HMM vessels, obliging the main carriers to give certain assurances.
Maersk claims its AE7 loops will offer “best-in-class” transit times from east China to Rotterdam and Hamburg, and be “competitive” in terms of the coverage of Bremerhaven and Wilhelmshaven.
The Danish carrier added that its TP16 loop would improve transit time between South China and the US South Atlantic by eight days, which it claims “will be the fastest in the market”.

IS AMAZON SHIPPING COSTS THE REAL ISSUE?

Amazon. Is real issue shipping costs? Or how they deliver supply chain performance retailers can't match!




LOGISTICS FUNCTIONS OR SUPPLY CHAIN MANAGEMENT

Do not confuse logistics functions with supply chain management. SCM




Friday, February 10, 2017

RETAIL CLICK AND COLLECT

Does retail click and collect put stores ahead of customers? Does it require more inventory and technology?




Thursday, February 9, 2017

TRACK AND TRACE & SUPPLY CHAIN MANAGEMENT

Is track and trace a real supply chain need--or is it at lesser issue? Is supply chain execution with managing POs and customer orders the real need?




ALIBABA TEAMS UP WITH UPS AND FEDEX FOR CHINESE EXPORTERS

Alibaba Teams Up With UPS, FedEx To Reduce Shipping Costs For Chinese Exporters




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Chinese e-commerce giant Alibaba is teaming up with major logistics and transportation companies including UPS, FedEx, Maersk and DHL to drive down the cost of overseas shipping faced by smaller Chinese exporters, the company said today.
High logistics costs have long been a major barrier to cross-border trade for China's small and medium enterprises. Shipping expenses account for 30% to 40% of the overall product cost in China, compared with 15% to 25% in developing countries, and 10% to 15% in developed countries, according to the China Federation of Logistics & Purchasing.
Over the last seven months, Alibaba Group’s international B2B site has announced partnerships with UPS and FedEx for express delivery, Maersk for container shipments, and DHL and Kuehne + Nagel for airfreight to boost cross-border logistics options available online through Alibaba.com.



Currently there are more than 100 logistics companies and 1,700 freight forwarders offering their services through Alibaba.com, which has an international membership base predominantly made up of Chinese manufacturers and suppliers selling globally.
Alibaba.com is beefing up the platform "to provide optimal, one-stop, door-to-door logistics solutions that connect China and the world," said Steve Su, Alibaba.com senior logistics expert. "We’re offering digital solutions that streamline and simplify the process, cut costs, and enable small- and medium-sized exporters to enjoy same service and price as big exporters do."
In December, Alibaba.com began allowing exporters to reserve space on Maersk container ships through the e-commerce site’s OneTouch service. OneTouch is offering online booking on select routes between five Chinese ports and eight overseas destination ports.
The Maersk tie-up helps to ease several challenges, such as unpredictable costs and booking cancellations, faced by small exporters when shipping on ocean vessels. Container companies typically prefer dealing with high-volume businesses, but Alibaba.com, which has around 150,000 members, effectively consolidates a large number of potential customers.
"As a platform, Alibaba is able to integrate small exporters and their demands, thus helping them secure more resources when talking with shipping lines," Su added.
By digitizing the shipping process, pricing is more transparent, goods can be tracked online, and small exporters have access to data such as routing information. Payments can be settled electronically within the system, and logistics companies also have access to exporters’ payment histories and other information provided by Alibaba to help determine creditworthiness.
In January, Alibaba.com announced a cooperation agreement that will integrate members of the world’s largest logistics network, WCA Ltd., with the Alibaba platform. WCA will vet and approve international logistics providers and freight forwarders for Alibaba.com customers.
The WCA network, comprised of 6,000 offices in 189 countries, helps smaller freight forwarders compete for global business. Approved WCA forwarders now have access to Alibaba’s sellers, opening up business opportunities with exporters that might ordinarily be out of their reach. The collaboration currently offers shipments generated by Alibaba.com’s members to the U.S., India and the U.K.

Wednesday, February 8, 2017

ONLINE GROWTH IN 2017

E-commerce sales growth to be 3x bigger than retail growth in 2017, per NRF. How many retailers have supply chains to meet customer expectations?



Monday, February 6, 2017

TECH STARTUPS IN LOGISTICS

Report: Faster deliveries open the market for tech startups to reshape the logistics industry



(Amazon Photo)

If you live in a city, chances are you’ve had packages delivered hours after you ordered them online. Same-day or next-day shipping is popular for obvious reasons and Amazon’s estimated 65 million Prime customers are proof of that.
Customers are getting their packages faster and online retailers are making more money, but what’s happening to the middle man as delivery times decrease?
A new report by CBRE found that the rise in online shopping has completely overhauled the logistics industry. Companies can no longer rely on a few distant warehouses to transport their goods. Instead, they’re moving into smaller sites closer to city centers.
In other words, the shift into same-day and next-day delivery is literally reshaping how warehouses look. In order to fit into to urban areas, fulfillment centers are getting smaller and more prevalent.
(CBRE Illustration)
According to CBRE, this move illustrates the logistics industry’s new focus on “the last mile” or the last leg of delivery. This last mile, from distribution centers to customers, has seen the most innovation as shipping times decrease.
“Customers expect speed and convenience, and logistics operators are compelled to give them what they expect in order to survive in this competitive business,” CBRE writes. “This is where technology comes into play.”
Tech startups such as Bringg and Deliv have responded to this demand. Bringg offers consumers real-time tracking information for their package, while allowing distributors to dispatch and manage orders from the web. With the service, drivers can interact directly with both customers and distributors. The same way you track your Uber or Lyft, you can now watch your package arrive.
Deliv also taps into the ride-hailing industry’s crowd-source model. With this startup, companies can mobilize a team of drivers when they schedule deliveries in a city. Much like ride-hailing, it’s both cheaper and more efficient than traditional delivery methods.
“For the first time in history, the fastest and most flexible same-day delivery is now also the cheapest shipping option,” Deliv touts on its website.
(CBRE Illustration)
The other solution to last-mile logistics are lockers, according to CBRE. Deliveries to locker locations allow retailers to focus on getting their packages to one location, instead of hundreds. Amazon has led innovation in this market, and currently has them in 13 markets across the U.S.
With shipping times continuing to shorten, there’s a new market for innovation in logistics within the city, CBRE concludes. Growth in e-commerce has spotlighted a market for startups to disrupt.

IoT AND SUPPLY CHAIN MANAGEMENT

IoT and greater connectivity will require faster, more responsive supply chains. More global supply chain revolution.




SUPPLY CHAIN MANAGEMENT AND OMNICHANNEL ATROPHY

Does tweaking the old supply chain instead of transforming it speed the way to omnichannnel atrophy?




Sunday, February 5, 2017

IS YANG MING AN ACQUISTION TARGET?

Yang Ming Struggling to Keep Up

          

Yang Ming profile.png
Rumors of “who’s next” constantly swirl within the battered ocean freight market. Whether it’s another bankruptcy or acquisition, fallout within the market continues as it works to right the ship. Increasingly, the focus is on Taiwan’s Yang Ming. Can it continue as is, will it need propped up financially or will it be allowed to collapse? Many questions surround this carrier. Below we continue our carrier profile series.

Friday, February 3, 2017

LATEST AMAZON FINANCIALS

Amazon continues to take control of its supply chain for customer experience, inventory velocity, time compression. Real story for competitors.

Amazon’s Profit Jumps, but Sales Growth Disappoints

Shares slide as company also issues lackluster sales guidance for current quarter


Amazon reported its seventh straight profitable quarter.
Amazon reported its seventh straight profitable quarter. Photo: Reuters
Amazon.com Inc.’s revenue growth and investments have for years come at the expense of profit. Now, the retail giant appears to have exhibited more discipline to preserve its bottom line.
The Seattle-based retail giant on Thursday said fourth-quarter profit jumped 55% to $749 million, topping the company’s own guidance. On the other hand, revenue increased 22% to $43.7 billion, hitting the midpoint of Amazon’s target, and below analysts’ expectations.
“There’s always a number of things that can impact customer spending, both positively and negatively during any quarter,” said CFO Brian Olsavsky on a conference call. “What we do, is continue to focus on the things we can directly control: for us that’s price, selection, customer experience. And on those dimensions we felt we made great progress.”
Many retailers resorted to heavy promotions during the critical holiday season last year. As a result, traditional brick-and-mortar chains ranging from Target Corp. to Macy’s Inc. have warned on profits and reported disappointing sales.
Amazon said promotions—which Mr. Olsavsky called “a cost of doing business”—weren’t a major factor in fourth-quarter revenue.
Amazon’s stronger margins likely reflect more discipline in spending and fewer promotions at the expense of profit, as well as a larger percentage of sales stemming from its third-party sellers, analysts said. Those sales are nearly pure profit margin because Amazon doesn’t have to buy and hold the product itself. It also gets paid for items that sellers ship in for Amazon to fulfill.
The company has “plenty of runway to continue with the present investment cycle,” said Charlie O’Shea, lead retail analyst at Moody’s Investors Service.
Amazon’s stock was trading down more than 4% after-hours Thursday on disappointing fourth-quarter revenue and softer-than-expected guidance for the first quarter.
Amazon often has bucked retail trends by dominating online sales. It commanded an estimated 42% of total holiday online spending growth last year, according to Slice Intelligence, which analyzes customer receipts. Apple Inc. was second, accounting for 5% of holiday e-commerce growth.
Growth and investments have been Amazon’s priorities since it was a startup. In his first letter to shareholders in 1997, Chief Executive Jeff Bezos declared that his strategy for creating shareholder value prioritized customer and revenue growth “because we believe that scale is central to achieving the potential of our business model.”
But the Amazon’s streak of seven profitable quarters—with a big jump in the most recent period— may come under pressure as the company enters a heavier period of investment.
Last month, Amazon pledged to create 100,000 full-time jobs in the U.S. by mid-2018—a tip of the hat to President Donald Trump’s employment drive. That would require building many more warehouses, some of which have been planned or announced.
Moreover, the retail giant has started laying the groundwork for its own shipping business to add more delivery capacity for the holidays, with the grander ambition of one day hauling and delivering packages for itself, other retailers and consumers, according to people familiar with the matter.
Amazon this week announced it is building its first air cargo hub in Kentucky, a $1.5 billion project. It also recently made its debut in the ocean-freight sector, handling shipment of goods to its U.S. warehouses from Chinese merchants selling on its site. It is taking on a role it previously left to global freight-transportation companies.
Those investments come in addition to Amazon’s branching out into industries other than retail, including web services, smart-home devices and music and video content. It recently became the first tech company to receive an Academy Award nomination for Best Picture.
Amazon is reaping the rewards of one project it has plowed money into: Prime, its $99 annual membership program that includes perks such as free, two-day shipping, and music and video content.
Mr. Olsavsky, noting the tens of millions of customers who joined Prime last year, said, “We’re pleased with the results we’re seeing.”
Write to Laura Stevens at laura.stevens@wsj.com

HUDSON BAY LOOKING TO ACQUIRE MACY'S

Would acquiring Macy's make Hudson Bay the Island of Misfit Toys? And what about Macy's lack of omnichannel and its supply chain?


BREAKING: Hudson's Bay reportedly in talks to acquire Macy's

Dive Brief:

  • Hudson’s Bay Co. is in takeover talks with beleaguered department store chain Macy’s, according to a report in The Wall Street Journal. Macy's share price jumped 8% in trading Friday morning in the wake of the report. 
  • Citing sources close to the discussions, the Journal states that negotiations between the companies remain preliminary, and address outright acquisition as well as a deal for Macy’s real estate and even potential partnership opportunities. There is also a strong possibility no deal will materialize at all, the report adds.
  • With a market value of $9.8 billion, Macy’s dwarfs Hudson’s Bay, which is valued at $1.8 billion and is the Canadian owner of retail brands including Saks Fifth Avenue and Lord & Taylor. Macy’s is burdened with about $7.5 billion in debt, which further complicates a deal. But a source said Hudson’s Bay could raise equity and debt against its real estate portfolio, which is worth as much as $14 billion, and could also bring a partner into the negotiations.

Dive Insight:

Macy's stock jumped 5% Thursday morning following a New York Post report stating the embattled retailer is in discussions to sell to a private equity firm in an effort to skirt a potential battle for control of its board of directors. With the toothpaste now officially out of the tube, shares of Macy's were halted Friday morning due to volatility, Seeking Alpha notes.
A potential Macy’s sale would effectively fend off the advances of Jeffrey Smith, founder and CEO of New York-based activist hedge fund Starboard Value. Reports indicate Smith is maneuvering for Macy’s board seats, with a proxy battle looming ahead of the retailer’s annual meeting sometime this spring: Starboard Value for months has pressured the department store retailer to unleash its real estate value as the company’s sales and stock price have remained tepid.
That kind of headache is the last thing Macy’s needs. With longtime CEO Terry Lundgren’s decades-long tenure winding down, the retailer is at an inflection point: Its massive expansion at the turn of the 21st century diluted its brand and hurt sales, but also left the company with billions of dollars in real estate — property that could prove irresistible to a potential suitor like Hudson’s Bay.
“[Macy’s] real estate is far more valuable than its aging retail business, which is strategically irrelevant in today's retail alignment and will lose sales, market share and relevancy year after year until it becomes extinct,” Nick Egelanian, president of retail development consultants SiteWorks International, told Retail Dive earlier this week. “Sears would have been much better off to sell itself for its real estate value at the height of the market before the Great Recession. Macy's cannot sell at the height of the market, but it can get out now instead of seeing sales decline year after year, no matter what they do.”
Hudson’s Bay seems like an unlikely partner, not only given its size but also in light of its own recent struggles. Just last month, the company lowered its fiscal year revenue expectations for the second time, citing challenges in North America and Europe. Hudson’s Bay now expects total capital investments, net of landlord incentives, to range between $660 million and $710 million in Canadian dollars, approximately 4.5%-4.9% of the midpoint of the sales outlook. Included in these amounts are the capital expenditures associated with the recent acquisitions of flash-sales site Gilt and European retailers Galeria Kaufhof, Galeria INNO and Sportarena.
Hudson's Bay CEO Jerry Storch maintained the company is dedicated to improving its exclusive product offerings, store improvements and “all-channel shopping experiences.” The retailer also is focusing on high-performing segments like dresses and active wear, and adding new categories, like toys, to its home goods assortment (something Macy’s also did in its holiday Backstage pop-ups in full-line stores). Late last year, Hudson’s Bay instituted a comprehensive review of its business operations to identify efficiencies, streamline processes and improve back of store productivity, while also enhancing customer service.
Hudson Bay’s promises echo similar forward-looking statements by Macy’s. But while the two companies may be philosophically aligned, recent earnings results offer little concrete evidence that even their combined might is enough to overcome the massive challenges facing the department store segment  most notably, the seemingly unstoppable rise of e-commerce and the corresponding decline in brick-and-mortar sales and mall traffic.