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Sent Items #100: Wednesday, Aug 19, 2020

Hi All!

Issue #100. What a journey since I wrote that first issue on November 3, 2017, received by 101 subscribers. I was living in San Francisco and had just left my full-time role at Shyp. Today I find myself almost three years removed, living in Nashville and running my own business. Thank you everyone for your readership, feedback, and support!  

This is a huge personal milestone and one that I am very proud of. And to help ‘cheers’ this moment, I would like to honor the symbolism in 100 and dedicate this issue to the historic date. On August 18, 1920, my (current) home-state of Tennessee became the 36th state to ratify the 19th Amendment, making women's suffrage legal in the United States. Tennessee played a pivotal role in the passage of the 19th Amendment, which granted women the right to vote in 1920. Eight states had rejected the amendment, and five had not voted. Suffragists saw Tennessee as their last, best hope for ratification before the 1920 presidential election. A seminal moment in our history.

I am also honoring this 100th issue with a longer form piece I have just posted to LinkedIn and Twitter this morning. I wrote a piece titled, ‘The Postal Service, Ecommerce, and Democracy’. I urge you to read, comment, question, and share.

Thank you everyone for continuing to read Sent Items every week. Please hit reply with any feedback, and I would be so thankful with any shares. 

Please stay well and healthy.

- Matt

As E-Commerce Booms, Robots Pick Up Human Slack - WSJ

  • Automation at FedEx’s hub clocks 8 hours a day of steady work, sorting around 1,300 packages an hour from bins onto a conveyor—four hours on the day shift and another four at night. These robots are not about to steal all the jobs in these industries, however. For now, they’re mostly filling vacancies created by surging demand and, where possible, giving humans a chance for promotion. For the foreseeable future, humans will prove more adaptable as work needs change.

  • Proponents argue that bringing robots into these roles is necessary for at least three reasons. First, the explosion of ecommerce means an explosion in the volume of packages shipped to homes. About 87 billion parcels were shipped worldwide in 2018—that’s 40 a year to every person in America—and this volume will more than double by 2025, according to Pitney Bowes. The number has grown much faster than expected during the pandemic. UPS said in the quarter ending in June, the volume of packages shipped from businesses to homes surged by 65% from a year before.

  • Second, the availability of workers even for essential businesses is reduced. Third, the need for social distancing within warehouses and other logistics facilities means automation can play a role in helping workers do their jobs without being directly adjacent to one another.

  • Despite widespread unemployment, companies in the logistics industry are still finding it hard to hire people fast enough. FedEx’s air hub in Memphis currently has 500 job openings.

Amazon is delivering nearly two-thirds of its own packages as e-commerce continues pandemic boom - CNBC

  • Amazon shipped 415 million packages in July, topping its three-month average between April and June. Amazon delivered 66% of its own packages in July, compared with 54% in July 2019. July volume growth for FedEx and UPS is higher than it was between April and June. While I don’t necessarily agree with these numbers - I believe Amazon self-delivered packages is likely closer to 40-50%, the order of magnitude is staggering. 

  • According to data from ShipMatrix, Amazon shipped 415 million packages in July compared with a monthly average of 389 million between April and June. The ecommerce giant also delivered 66% of its own packages in July, compared with 61% between April and June. Shipmatrix believes Amazon will continue to deliver more of their own packages, potentially reaching 80% of their own packages by next year. It means UPS and the USPS will be looking for more business to replace the Amazon business.

US E-Commerce Grew 44% in the Second Quarter - Marketplace Pulse

  • U.S. ecommerce grew 44.5% in the second quarter, the fastest growth in over two decades, lifting ecommerce share of total retail to 16.1%. According to the Department of Commerce, retailers generated $211 billion in online sales in the second quarter compared to $146 billion a year ago.
  • For the past ten years, ecommerce in the U.S. grew, on average, 15% year-over-year. Growth remained at that level during the first quarter of 2020 but has reached all-time highs in the second quarter at 44.5%.
  • At 44.5% overall U.S. ecommerce growth, Amazon likely has lost some market share to its rivals. For the first time, its sales grew at or below the total ecommerce growth. The company doesn’t report the growth of its sales in the U.S.; nonetheless, its North America segment 43% in the second quarter. 

USPS to Hike Shipping Rates during Holiday Shopping Season - EcommerceBytes

  • The USPS will raise shipping rates during the holiday shopping season. It will raise all commercial domestic competitive package volume on October 18. The temporary rate hike will be in effect through December 27, 2020.

  • Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, and Parcel Return Service will all see rate increases.

  • To get an idea of the impact, a current Priority Mail commercial rate of $7.02 would rise by 40 cents to $7.42 - an increase of 5.7%. The Postal Service is restricted by how much it can raise dominant rates (i.e. First Class Mail), but has much more leeway with rates for services classified as competitive.

  • Today's announcement is bad news for SMB and mid-market brands who, unable to negotiate volume rates with UPS and FedEx, rely on the USPS to offer competitively priced services their orders.

FedEx to raise peak surcharges on Ground, Express, SmartPost - Supply Chain Dive 

  • In other peak season surcharge news, FedEx announced its slew of surcharges on Tuesday beginning as early as October 5.

  • From Nov. 2 to Jan. 17, domestic residential deliveries for shippers sending at least 35,000 parcels weekly via FedEx Ground or FedEx Express will incur a $1 to $5 surcharge depending on how much the shippers' parcel volume exceeds pre-pandemic levels. FedEx SmartPost packages will incur three different surcharges through different stages of peak season, ranging from $1 to $2 — more than doubling the existing peak surcharge put in place June 8 due to the pandemic.

  • FedEx executives said on an earnings call in July that peak surcharges were the new normal. The pandemic kept consumers at home and drastically shifted parcel volume away from B2B and toward more operationally costly B2C deliveries.

  • The loss of dependable service and the surcharges are already driving shippers toward regional carriers. By doing so smartly, shippers can save 7% to 12% this peak season. But even with negotiations, contingencies and strategy planning, surcharges will inevitably add up.

  • FedEx's addition of $1 to $2 surcharges to SmartPost is especially challenging for small businesses who rely on the service's competitive rates.

Walmart second-quarter results crush estimates, as e-commerce sales jump 97% - CNBC

  • Walmart’s ecommerce sales in the U.S. shot up by 97%! U.S same-store sales grew by 9.3% in the second quarter, fueled by purchases of food and general merchandise. 

  • Walmart CEO Doug McMillon said the company will look to build on these gains by adding a membership service, Walmart+.  He did not say when that would launch or provide details about its perks. He said the program will speed up deliveries for customers through curbside pickup and delivery, strengthen relationships with them and collect valuable data.

Shopify and the Hard Thing About Easy Things - Not Boring

  • Superb article on Shopify and “arming the rebels”. Here’s the hard thing about easy things: if everyone can do something, there’s no advantage to doing it, but you still have to do it anyway just to keep up. 

  • By making Direct-to-Consumer easier, software like Shopify increases entropy and lowers the probability that any specific company will generate sustained profits. Take a read to find out more!

Lineage Logistics finalizes 10 acquisitions as cold storage demand grows - Supply Chain Dive

  • Over the past 18 months, Lineage Logistics has finalized 10 acquisitions spanning 24 locations in the U.S. Some of the assets have already been integrated into Lineage Logistics' network, while the remainder will be integrated by the end of the year.

  • The acquisitions, which encompass 5.5 million square feet and 153 million cubic feet of capacity, focus on adding capacity and services in key markets. Lineage’s recent acquisition spree is in response to growing demand for cold storage, which is supported by strong population growth, changing consumer food preferences and increasing demand for the services of third-party logistics providers as the food supply chain becomes increasingly complex.

  • I can attest to the fact that fresh, frozen and cold-chain is an increasing need in the world of ecommerce. There are not many options, and those that exist tend to shy away from emerging ecommerce brands.

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© 2020 Second Marathon Consulting, LLC
Matthew Hertz is the founder of Second Marathon.

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