News / US retail giants expand into 3PL services as smaller rivals move out

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In the US, the retail giants are moving further into logistics, with Walmart and Amazon expanding their offerings to third-party users – but smaller retailers that had ventured into the space are throwing in the towel.

Walmart is to launch a new service for vendors looking to sell to consumers in Mexico and Canada. The retail behemoth confirmed it was conducting tests of “new marketplace capabilities that leverage our fulfilment and logistics network to help sellers on our US marketplace reach customers shopping across borders”.

Walmart Exports is for third-party sellers that already use its fulfilment service: consumers in Canada and Mexico can order goods at Walmart.com, which will be delivered to them using the Walmart Fulfilment Service (WFS) network.

Apparently, eligible products from their portfolio will be enrolled automatically in the programme, provided the vendors are using WFS for deliveries within the US. It does not extend to products they deliver through other channels.

There are no additional fees beyond the WFS charge; international shipping fees, import duties, and taxes are paid by the customer at checkout.

This is not the first international logistics offering from Walmart. It joins Walmart Cross Border, which offers ocean freight service for sellers moving inventory from China and Vietnam into the US WFS network.

Walmart CFO and EVP John Rainey said in an earnings call in November that third-party sellers were important, as they allow the company to offer a broader assortment of products in categories like electronics and automotive.

While the initial focus of Walmart Exports is on the neighbouring USMCA markets, the service is expected to be extended to other countries.

Like the new Walmart venture, Amazon’s new move in the logistics arena does not come as a surprise. The company is getting ready to offer its LTL capacity in the US to third-party shippers.

A report by the transportation team at Morgan Stanley says that Amazon “appears to be in the early stages of reaching out to shippers regarding their LTL offering”, adding that the firm’s push to offer this capacity to the market is expected in June or July.

Morgan Stanley reported that 11% of the shippers it contacted about the issue reported that they had been approached by Amazon.

The e-commerce behemoth’s move follows the launch of an inbound LTL service last April for third-party shipments headed to its fulfilment network. In Europe, Amazon already offers LTL services in the UK and Germany.

Meanwhile, in contrast to the Walmart and Amazon expansion, American Eagle Outfitters (AEO) and Office Depot are walking away from their 3PL ventures.

AEO confirmed it was winding down its logistics subsidiary, Quiet Logistics. On Tuesday supply chain provider Stord announced that it would take over QL’s warehouse in Dallas and “become the preferred fulfilment provider of all former Quiet customers”.

 During the pandemic, AEO set out to blaze a trail: it acquired delivery start-up AirTerra as well as Quiet Logistics to bolster its logistics capabilities and offer its network to other shippers. While these moves shortened delivery times and reduced costs, the idea to monetise its supply chain by selling it as a service proved a frustrating balancing act between its own operations and the flows of others.

Retail expert Rick Watson, CEO of RMW Commerce Consulting, said he had drawn a stark conclusion from AEO’s Quiet Logistics adventure.

“If logistics isn’t your core DNA, it’s just a heavy, expensive anchor,” he commented. “The lesson to retailers? Stay the hell in your lane.”

Indeed, customers of Veyer, the logistics arm of Office Depot, are also looking for a new fulfilment provider. Following the $1bn takeover of Office Depot by Atlas Holdings last month, the retailer is walking away from e-commerce fulfilment services for other firms and folding Veyer into its Business Solutions subsidiary to concentrate on its own logistics requirements. It remains to be seen if these need 8m sq feet of space in 40 warehouses across the US.