UPS, FEDEX, E-COMMERCE

Are UPS & FedEx trying to compete with and go around their corporate retail customers?

Borders Matter Less and Less in E-Commerce

FedEx, UPS race to offer services as more Web shoppers buy from abroad

ENLARGE

Shannyn Allan bought a statement necklace directly from China for a much cheaper price than what she saw at a local boutique in Chicago. Photo: Taylor Glascock for The Wall Street Journal

By

Laura Stevens

Updated June 23, 2015 11:11 p.m. ET

4 COMMENTS

E-commerce made it a breeze for a shopper to buy something from the other side of the country. Now, retailers and delivery companies are making it just as easy for shoppers to buy something on the other side of the world.
Blogger Shannyn Allan recently saw a $70-plus faux stone necklace in a boutique near her home in Chicago. She snapped a photo, ran it through Google Image and found a website where she could get the same one for $16 with approximately $7 added for shipping. It arrived on her doorstep about three weeks later—three weeks, because it was coming from China.
FedEx Corp. , United Parcel Service Inc. and other global delivery companies are banking on cross-border shoppers like Ms. Allan, who believe geography is no object when it comes to finding what they want.
Late last year, UPS bought i-parcel LLC and FedEx bought Bongo International. Both acquisitions are designed to allow foreign shoppers to easily purchase goods on a retailer’s site, automatically changing options to reflect the country from which a consumer is shopping. The sites adjust the currencies and shipping methods depending on where a shopper is based, and calculate shipping costs, taxes and duties. FedEx said in April it would buy Europe-based TNT Express for nearly $5 billion to expand in Europe, while UPS is doubling investment in Europe to nearly $2 billion over five years.
Cross-border online shopping has taken off as access to the Internet and mobile shopping spread and shipping options get cheaper and faster. Companies like Amazon.com Inc. and Alibaba Group Holding Ltd. have fueled the trend through letting smaller retailers sell their goods internationally via online marketplaces.

ENLARGE

Shipping took three weeks, but Ms. Allan saved about $50. Photo: Taylor Glascock for The Wall Street Journal

Now, a stronger dollar has encouraged more U.S. consumers to play the game, and that has accelerated the trend.

Advertisement

While cross-border shopping is still a fraction of total global e-commerce spending, it is the piece growing most quickly, at a rate of more than 25% annually, according to delivery company executives. By 2018, about 130 million people are expected to buy online from a country other than their own, spending an estimated $307 billion—nearly triple the amount spent in 2013, according to a Nielsen Company research study commissioned by PayPal. Already, about a quarter of all e-commerce purchases are made with a foreign retailer, according to a survey of nearly 20,000 global shoppers by comScore and UPS released in March.
Busy trade lanes, which the 2013 PayPal study calls “the modern spice routes,” have been developing between the U.S., the U.K., Australia, Germany, Brazil and China. The primary online shopping destinations are the U.S., China and the U.K., according to a Forrester Consulting study for FedEx released in December. Australian cosmetics brand Mirenesse is shipping big envelopes of lip gloss to U.S. shoppers. Chinese consumers are buying powdered baby formulas online from Germany. Amazon marketplace fulfilled orders to customers in 185 different countries last year from sellers in more than 100 different countries.
“All of a sudden, e-commerce puts the consumer into the driver’s seat,” says Thomas Kipp, CEO of DHL eCommerce, a unit of Deutsche Post AG . “The consumer has the choice of when he buys, where he buys, how he wants to pay.”
The process has become so simple, consumers often don’t know they are ordering from a foreign retailer. When they do, “the No. 1 driver is that they can’t find that item in their country,” says Carl Asmus, FedEx’s vice president of international marketing.

Global e-commerce presents myriad logistical complexities for retailers and manufacturers. Each country has its own customs policies, duties and taxes. Consumers want to know the full cost of a purchase at the outset. If the retailer gets the math wrong, a customer may have to pay unanticipated duties or an order might get stuck at the border.
DHL’s Mr. Kipp was charged an extra $33 in duties when a pair of $120 sunglasses were delivered to his home in Germany from Australia last month. He wasn’t surprised but a consumer not in the shipping business might have been.
Claire Bauling, who lives in northern Italy, buys everything from art supplies to greeting cards from her native U.K. Usually it is worth the extra she pays on shipping, she says. But not always. Her “personal low” was an order of tea bags from Amazon. “I won’t tell you how much I spent on shipping,” she says. “It was quite embarrassing.”
Online merchants can find themselves in a logistical quagmire of language barriers, currency differences and return hassles. Returns— now a key part of the online purchase decision—can be unpredictable if not impossible.
FedEx, UPS and DHL are racing to re-engineer their service offerings to make cross-border shopping seamless. As a retailer, “I can try to build all that expertise myself, or I partner with some other organization that makes it easier for me to do that,” said Steve Brill, UPS vice president of global business-to-consumer strategy.

AMAZON

Amazon’s ‘Treasure Truck’ Combines Flash Sales and Storefronts

by Spencer Soper

June 25, 2015 — 8:00 AM EDT

Share on FacebookShare on Twitter

Share on LinkedInShare on RedditShare on Google+E-mail

Share on FacebookShare on Twitter

Share on LinkedInShare on RedditShare on Google+E-mail

Amazon.com Inc. is bringing impulse buying right around the corner.
The Web retailer unveiled Thursday the Treasure Truck, which carries paddle boards, porterhouse steaks and other discounted items that people can buy online and pick up when the vehicle is nearby. Amazon’s mobile application will tell shoppers what’s on the truck each day and list pickup times and locations in Seattle, where the company is based.
While Amazon has daily deals and flash sales on its website and has experimented with temporary physical stores, the marketing stunt effectively merges them. The initiative is aimed at luring shoppers to marked-down merchandise in a short window of time and getting goods into their hands as soon as possible.

While the Treasure Truck has been spotted on the streets of Seattle this week, it will be open for shoppers starting Saturday, the company said.
“It can only work in densely populated areas like New York and Chicago,” said Victor Anthony, an analyst at Axiom Capital Management in New York. “It’s all about getting as close to customers as they can get.”
The Treasure Truck is also designed to increase Amazon’s day-to-day engagement with customers on mobile devices while creating demand through flash sales. And it lets Amazon share the costly last-mile of delivery with shoppers, who will have to go and pick up goods at a set location rather than having them delivered directly to homes and businesses.
Amazon has been pushing for quicker order fulfillment with one-hour deliveries in New York, Miami and a limited number of other big cities. Amazon also competes with Groupon Inc., Zulily Inc. and other daily deals websites, offering shoppers flash-sale items and discounted services.

E-COMMERCE IMMEDIACY & RETAILERS

What do you say to a retailer who fails to realize E-commerce Immediacy and the new supply chain?  Hasta la vista, baby? 

NEW SUPPLY CHAIN MANAGEMENT

It is nice to see others beginning to say what LTD Management has been saying for a long time about the need for New Supply Chain for multichannel / omnichannel.  Welcome to real supply chain management.

BLUE OCEAN SUPPLY CHAIN, CHILE

Here is a picture of the podium from my Blue Ocean Strategy Using New Supply Chain Management presentation in Chile. It sounds like I have a rock band--

UPSTREAM SUPPLY CHAIN

The New Supply Chain Management that drives E-commerce and Multichannel Immediacy moves upstream to key suppliers--identified by supply chain segmentation.  The work with these suppliers goes beyond collaboration and creates a quasi vertical integration--supported by advanced process and technology integration--that drives important benefits downstream with time compression and inventory velocity2.

 

RETAILERS, E-COMMERCE IMMEDIACY

This is how many companies, especially retailers, are viewing e-commerce immediacy & the New Supply Chain--

 

CONTAINER SHIPS, GLOBAL TRADE

Container ships facilitated a growth in global trade. Then global trade facilitated a growth in container ships.

CONTAINER LINE PORTS

Where is the greater financial risk for ports--invest to handle megas or not invest?  That is the question.  Their is much uncertainty over line bankruptcies and the future of alliances.

CSCMP, COUNCIL OF SUPPLY CHAIN MANAGEMENT PROFESSIONALS, STATE OF LOGISTICS REPORT

Takeaways From the State of Logistics Report

                               

These are good times for the logistics industry, but a shortage of everything from truck drivers to rail equipment threatens to derail momentum, a new report says. Here are five findings from the Council of Supply Chain Management Professionals’ annual “State of Logistics” report:

23 Jun 2015 7:00am

By

Robbie Whelan

• 1 The Trucker Shortage

  Share on Twitter
  2014 was “the best year for the supply chain industry since the Great Recession,” the Council says. But freight costs are poised to rise, with trucking a potential catalyst. The American Trucking Associations estimates the driver shortage to be between 35,000 and 40,000 workers, as baby-boomers exit the business and aren’t replaced by enough younger truckers. Higher wages would attract drivers, at the price of higher freight costs.

  

  Getty Images

• 2 Rail Infrastructure

  Share on Twitter
  Rail traffic increased 4.5% in 2014 and is now generally back to pre-recession levels, the Council found. But are the nations tracks, bridges, locomotives and freight cars equipped to handle rising demand? Between 2009 and 2013, freight railroads invested $115 billion in infrastructure and equipment, an average of $23 billion per year. In 2015, that number is expected to rise to $29 billion, and the industry is expected to hire 15,000 new employees. Shippers will be watching to see if the investment and staffing increases will be enough to keep up.

  $29 billion

  The amount expected to be spent on rail infrastructure and equipment in 2015.

• 3 Warehouse Crunch

  Share on Twitter
  Warehouse vacancy rates have plunged to the low single digits at some ports, and the crunch could worsen, the Council found. Taking up space: the online shopping boom, economic growth and transportation bottlenecks. CoStar Inc. reported that at the end of the first quarter, the national warehouse vacancy rate was 6.7%, but was just 3.2% in Los Angeles. For shippers, this means higher costs to store goods, which could lead the market to adjust by building more warehouses.

  

  Daniel Acker/Bloomberg News

• 4 Fixing Air Freight

  Share on Twitter
  In 2014, carriers moved a record $968 billion in high value merchandise in the cargo holds of freight aircraft, the Council found. But despite high volume, air freight revenue fell 1.2%. Air was the only mode of freight transport that failed to produce increased revenue for carriers.

  

  Bloomberg News

• 5 West Coast Hangover

  Share on Twitter
  Ocean freight recovered well in 2014, but the East Coast ports saw the biggest percentage gains among all U.S. ports, the Council found, due mainly to congestion caused by labor troubles along the West Coast. Some ports, like Portland, Ore., saw their container traffic all but wiped out. It’s not clear whether those gains are permanent, or if traffic will return to old patterns now that the labor conflict has been resolved.

CONTAINER LINES, MORE SERVICE DETERIORATION

And more problems for supply chains!!!

Shippers warned: more service cuts will come as carriers struggle to curb losses

By Mike Wackett

06.24.2015 · Posted in Loadstar posts, Sea Add to favorites

With global container spot freight rates in freefall and contract rates being discounted by ocean carriers just to hold onto business, Drewry Supply China Advisors said yesterday there was an increasing risk to shippers that entire service strings could be removed with little or no warning as container lines attempt to stem mounting losses.
Carriers on the Asia-Europe trade have so far used ad-hoc voyage cancellations in a bid to rebalance capacity and support general rate increases, but as this has proved increasingly ineffective, some analysts have now suggested that alliances may have little option other than to temporarily idle ships.
In its Container Freight Trends & Outlook webinar yesterday, Drewry’s head of research products, Martin Dixon, and senior consultant Stijn Rubens left participants in little doubt of the seriousness of the situation and said shippers should closely monitor the financial position of carriers.
Mr Rubens emphasised the parlous position of Asia-North Europe carriers. Spot rates have plummeted to less than $200 per teu from a high of over $1,200 in January.
Weak demand has caught carriers off guard, falling 8% below 2014 levels in recent months, while the trade has continued to receive new ultra-large container vessels (ULCVs) from shipyards. This toxic combination has resulted in general rate increases being ignored as lines grabbed cargo at any price, explained Mr Rubens.
The problem is exacerbated by the flood of newbuilds in the 13,000-19,000 teu range, he added, which will average one a week for the remainder of the year. Even more daunting is the prospect of another 46 scheduled for delivery in 2016.
Moreover, the peak season, when carriers on the route traditionally make most of their money, is now predicted to be “muted” this year, which will pile on more pressure in the weeks to come.
Drewry added that the situation on the trade from Asia to the US was not much better.
Again, GRIs have been largely ignored, with the added factor of a temporary shift of cargo away from the US west coast, tempting carriers to deploy too much capacity to east coast ports, triggering a new round of rate erosion.
Meanwhile, on the Pacific coast, the cascading of larger vessels onto the trade has also had a negative effect on freight rates, which says Drewry has resulted in the “first cracks” in the ocean carriers’ strategy of constantly upsizing ships.
Elsewhere, north-south trades have been affected by what is happening on east–west routes and Drewry’s indices are all trending downwards, offering little chance of higher returns for beleaguered carriers.
Indeed, even the most optimistic of carriers will struggle to find any positives in Drewry’s latest freight rate analysis, and the outlook appears equally grim, according to Mr Dixon. He said Drewry did not expect the key Asia-Europe trades to return to equilibrium “in the foreseeable future”.

ALIBABA, U.S. E-COMMERCE STRUGGLE

Is the glitter off Alibaba?

Alibaba is selling US e-commerce site 11 Main just a year after it opened

Written by

Josh Horwitz

Obsession

China's Transition

June 23, 2015

Back away slowly. (Michael Euler/AP Images)

Share

Written by

Josh Horwitz

Obsession

China's Transition

June 23, 2015

Alibaba is the king of e-commerce in China, but it is having a hard time replicating that success in the US.

The company is selling 11 Main, a boutique consumer e-commerce site it launched with great fanfare a year ago to OpenSky, a venture capital-backed e-commerce site based in New York, a spokeswoman confirmed to Quartz. The deal was first reported by TechCrunch, which said Alibaba will take a 37% stake in OpenSky.

Alibaba didn’t respond to questions regarding the future of 11 Main’s employees or additional details about the deal.

Alibaba’s approach to e-commerce in the US has been more tentative than the company’s aggressive approach in China, because it is a latecomer in a mature market. After purchasing three startups that helped US merchants sell products on eBay and Amazon, the company financed 11 Main, a new standalone e-commerce site founded by executives from its new companies. While Alibaba provided funding and some guidance, management was mostly hands-off.

In the year since it launched, 11 Main does not appear to have made much of a splash in the US. The company has not disclosed any sales or traffic figures, which probably indicates they aren’t much to brag about. A quick browse of the website shows little to differentiate it from the myriad of boutique e-commerce marketplaces in the US hoping to chip away at Amazon, eBay, and Etsy.

11 Main, Alibaba’s consumer-facing e-commerce marketplace for the US.

Alibaba said in a statement the sale will “bring together leading services used by over 50,000 of the world’s most creative brands and millions of discerning shoppers.”

Alibaba has made several other investments in US-based e-commerce companies, most notably in ShopRunner, which competes with Amazon Prime. It has also placed bets on US-centric social apps like Snapchat and Tango that have exceeded the $100 million mark.

But the company’s future in the states increasingly looks dependent on Taobao and Tmall, its flagship Chinese properties. Jack Ma recently conducted a grand tour of the US, encouraging American merchants to sell their goods online to China. There, a rising middle class is demanding a diverse range of high-quality goods that can’t be found domestically. Alibaba’s best American asset, it seems, is Alibaba itself.

 

CONTAINER LINE RATE FIASCO

Need actions that lines have not shown they would take.  What is next--bankruptcies?

Container lines must take drastic action to halt the freight rate rot and stay afloat

By Mike Wackett

06.22.2015 · Posted in Loadstar posts, Sea Add to favorites

The poor health of the Asia-North Europe tradelane is forcing the four ocean carrier alliances into a headlong rush to cancel sailings ahead of 1 July general rate increases, although one leading analyst claimed that nothing less than suspending four strings could prevent further financial disaster for lines.
Friday saw the Asia-North Europe component of the Shanghai Containerized Freight Index (SCFI) shed another $38 to reach another all-time low of $205 per teu, driving spot rates deeper into calamitous sub-economic levels.
Moreover, rates of $150 per teu are apparently still being touted by carriers desperate to fill their ships from Asia to North Europe, making the 1 July GRIs of $900 – $1,200 per teu equivalent to a 10-times increase in pricing.
Carriers on this route must now be seriously concerned that their hitherto proven remedy of blanking sailings to support GRIs is having no impact on a market also seriously weakened by a 20% fall in the value of the euro against the US dollar in the past six months.
European imports have been curbed as a consequence, while the Russian economic situation has also added to the troubles – a toxic combination that has sent growth into reverse, with April headhaul volumes showing a nigh 9% year-on-year decline.
A typical example of how the Asia-North European carriers have reacted to the soft market, and are cutting capacity, is provided by CMA CGM’s customer advisory dated last Tuesday, which announced that it and its Ocean Three alliances partners, CSCL and UASC, would “perform 12 alternative blank sailings during the third quarter of 2015”.
CMA CGM said the effect of the blanked sailings between weeks 27 and 38 would be to remove a whopping 12,400 teu of nominal capacity a week from O3’s offer in what is traditionally the beginning of the peak season.
However, this and ad-hoc capacity reductions from members of other alliances were still insufficient to arrest the relentless weekly decline of the SCFI.
Indeed, transport consultant Alphaliner said it regarded such ad-hoc remedies, including the downsizing of the 2M’s AE9/Condor service announced the previous week, as “tepid moves” that “fail to fully address” an oversupply crisis on the trade which has caused freight rates to plunge 80% since January.
At the same time, capacity will continue to increase: there is scheduled to be one 13,800–19,000 teu newbuild ultra-large container vessel (ULCV) delivery each week until the end of the year.
According to Alphaliner, there is only one way to stop the freight rate rot and the ultimate threat of carrier bankruptcy, and that is to suspend, at least temporarily, services that are not required in the current climate.
Its radical suggestion is that the smallest loop should be removed from each of the alliances, entailing the suspension of 2M’s AE9/Condor string; the O3 FAL3/AEC7/AEX4 service; the NE8/CES loop of the CKYHE alliance and the G6’s Loop 1 service.
Alphaliner said this service cull would remove 14% of Asia-North Europe capacity – around 39,000 teu a week – and go a long way to rebalancing the beleaguered trade.

RETAIL CLICK AND COLLECT

Are retail click and collect pickup programs really any different than what restaurants have been doing with carside type programs?

SUPPLIER PORTALS

Too Many Supplier Portals Causing Companies Headaches?

David Gustin

- June 16, 2015 4:57 AM |

Categories:Technology & Platforms | Tags: Billtrust, cloudtrade, einvoicing, supplier portals

Richard Manson director of cloudtrade wrote an interesting piece the other week about suppliers being overlooked around einvoicing. The point of the piece was that when a company has to deal with a myriad of supplier portals from their buying customers, it can be an IT nightmare.
When one customer requires them to invoice them using Ariba, another Basware and still another Tungsten, it could make their life difficult. Is this a serious problem as Richard states? Certainly his point that more global procure to pay enterprises are adopting einvoicing is true.
And of course if you are big enough, most likely you are already using some electronic format to exchange information with your buyers such as EDI.
If you are one of the 18,000 companies in the $100M to $1bn range in the States, and sell to the Global 2000, you may face this challenge. Can your IT resources handle the interface requirements in-house? Richard claims that building a bespoke solution is unlikely to be cost effective and I guess he would know, saying that producing invoices in a number of different formats and sending via a number of different e-invoice networks requires an ongoing budget. Another option is to use a bill consolidator service from the likes of Richard’s company cloudtrade or BillTrust, which offers three modules for invoice presentment, payment and cash application of the payment.
So this really seems to be a potential issue for the small to medium size guys, and mostly small guys selling indirect services to large enterprises.
Certainly the best option for you is if your buyers make the smallest change possible for you to send them an invoice, and that is using PDFs. PDF arrangements address quite a few issues around supplier adoption because it is very straight forward. Of course the Buyer will still need compliance and processes, etc so they don’t have errors in their ERP but that is another story.
I do think there is a bigger issue that large enterprises are overlooking, and that is the platforms they require their suppliers to use to get early pay, whether it be for supply chain finance, pcards, or dynamic discounting, but that too is another story.
It would be good to hear from companies that find they are having to adopt many e-invoicng platforms. Is this really disrupting your receivables processes, to the point onboarding is becoming a real headache?

NEW SUPPLY CHAIN MANAGEMENT

E-commerce Immediacy has brought fresh thinking to supply chain management.  No more same old.  New.  Exciting.

SUPPLY CHAIN DUALITY

Many firms--retailers, manufacturers, and wholesalers--are now trying to deal with two supply chains. One is for their traditional business--be it, retail, manufacturing, or wholesale.  The other is for E-commerce Immediacy.

Their traditional supply chains deals with cases and pallets and with large shipments. Immediacy is often about eaches and small shipments.  It is faster, leaner, and agile.  

LTD has outlined the new supply chain/the Blue Ocean Supply Chain in various posts.  Please read them.

CONTAINER LINES

Container lines are asset rich and cargo poor--and are adding more assets.  Riddle me this, Batman.