You shop, Maersk ships: a new Amazon challenger emerges
A Danish shipping giant is betting that your online shopping for appliances, furniture and sweatpants will be the next phase of its growth.
Maersk, which carries nearly a fifth of the world’s ocean freight, recently purchased Visible, a logistics company with nine e-commerce distribution centers in the United States that store and pack orders for retailers. With the acquisition, Maersk says, it can fill orders and get them to the doors of 95% of all American households in two days.
The company’s strategy: Take advantage of its fleet of 700 container ships to build a supply chain offering a port-to-door service. This, according to Maersk, will reduce costs for retailers and customers by minimizing package transfers to external contractors, a common practice in the industry.
The plan is to attract customers who sell from their own platforms and need help filling orders, said Brian Bowers, COO of Visible. Amazon’s multi-channel fulfillment service targets these sellers as well, and while the company hasn’t provided data on the number of third-party sellers using it, that’s not the bulk of its business. execution. Visible offers personalized packaging, allowing retailers to maintain control of their branding throughout the delivery process. The setup also means fewer giant packages filled with plastic air bubbles. It’s about moving away from selling products through popular online marketplaces run by Amazon, Target, or Walmart.
“We find clients who want to do something different,” said Bowers.
It’s no secret what motivates Maersk to fulfill online orders. E-commerce exploded during the pandemic as consumers filled virtual shopping carts rather than tote bags at the mall. Online sales grew 44% in the first three months of 2020. Growth has moderated to 9%, but e-commerce continues to grow faster than the rest of retail.
As a result, companies are reinvesting their pandemic deals in better e-commerce services. Walmart is investing billions to expand local distribution centers and buy robots to fill orders faster. Target, whose e-commerce business has grown faster than that of its competitors, is reinvesting $ 4 billion of those sales into a strategy that includes building its e-commerce capacity. Even fast fashion retailer American Eagle Outfitters is getting into e-commerce with the purchase of Quiet Logistics, announced Tuesday.
Amazon, which generated around 40% of e-commerce sales in the United States in 2020, has doubled its warehouse space since the start of the pandemic. It currently has more than 350 distribution centers, sorting centers, air hubs and other facilities to move goods.
Packing orders and getting them out has become a very competitive part of e-commerce, accounting for $ 78 billion in sales worldwide in 2020. Consumers expect their packages to arrive fast or for free. Combining Maersk’s marine and port services with order fulfillment can help retailers meet these consumer expectations, said Narin Phol, regional general manager of Maersk’s North American operations.
“We have all the pieces of the supply chain,” said Phol.
Carlos Rodriguez, a lawyer who negotiates deals for e-commerce and transportation companies, noted that Maersk offered an alternative to online marketplaces. Selling through a large retailer’s platform gives merchants access to robust fulfillment services, but can come at the cost of branding when products arrive in Amazon smile boxes or with them. Target or Walmart logos.
“This will create a new competitive environment,” Rodriguez said of the acquisition.
In pursuit of Amazon
Tightening the supply chain improves purchasing for customers, said Jordan Speer, retail industry analyst at IDC. Fast delivery is such a selling point for e-commerce that in some ways, she says, “the product is the supply chain.”
Amazon changed consumer expectations when it introduced its Prime two-day delivery service in 2005. With Prime now available globally, 200 million people have become accustomed to its fast service for products sold on websites. Amazon’s sprawling sprawl, which includes nearly 2 million independent sellers. .
Nearly half of Amazon’s third-party vendors in the United States let the company fulfill their orders. The service leverages the company’s hundreds of facilities in the United States and uses a highly systemized, labor-intensive process in which people and robots fill boxes. Amazon also has its own fleet of semi-trailer trucks and air cargo carriers, and has delegated more than 1,300 small delivery companies to deliver packages to communities in the United States and Europe.
Amazon is also expanding its access to port terminals by 50%, increasing the speed at which it can unload goods for itself and its third-party sellers, and has doubled its capacity to load and unload shipping containers in its warehouses then. that it is trying to meet global shipping delays for the holidays.
From sea containers to delivery trucks
Maersk and Visible have something the e-commerce giant doesn’t: hundreds of container ships around the world. Maersk owns or charters more than 700 vessels and has a subsidiary, APM Terminals, which operates 76 port terminals. Maersk has a great source of potential customers for Visible’s fulfillment services, as these containers hold millions of tons of consumer goods, many of which will need to be shipped directly to a customer once they land.
Visible also offers proprietary software that optimizes delivery through one of the company’s five shipping partners: UPS, FedEx, USPS, DHL, and Pitney Bowes. Amazon is also optimizing deliveries.
Additionally, Visible works with retailers to customize package sizes and get branded logos on the boxes they ship. This can reduce shipping costs for retailers, Bowers said. It can keep the company that designed the product in mind when you open the package, instead of making the Amazon, Target, or Walmart logo the first thing you see when you receive it. It resolves the loss of consciousness that causes people to say something like “Got it on Amazon” about things they actually bought from another merchant.
“We have a lot of customers who say, ‘I actually don’t want Amazon to own my brand,’” Bowers said.