Teamsters Vote Down UPS Contract but Negotiations Continue

While the majority of UPS workers represented by the Teamsters union voted against a new contract, negotiations will continue as turnout was low and the no votes didn’t meet the threshold for killing the deal.

According to the Wall Street Journal, 54.3% of 243,000 Teamsters members that include UPS drivers, sorters and other workers voted against a new five-year contract Friday, while 62.1% of 11,000 freight workers voted down a separate agreement; several regional and local deals were voted down as well.

Union rules require a two-thirds vote to reject a contract when less than 50% of members vote.

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Now Bankrupt, Sears Was Once the Amazon and Walmart of Its Day

Creative destruction. The term was coined by economist Joseph Schumpeter to name the process of businesses eliminating one another as they evolve. Today, no company better represents this evolution than Sears Holdings (NASDAQ: SHLD), the parent of Sears and Kmart.

Now a retail dinosaur and officially bankrupt, Sears was the largest American retailer as recently as the 1980s, and it dominated over the postwar era and much of the 20th century. Many of the innovations and strategies the company pioneered were borrowed by Walmart (NYSE: WMT), the biggest American retailer of the last generation, and later Amazon (NASDAQ: AMZN), the defining retailer of the e-commerce era — and there are more than a few similarities among them.

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Walmart to expand shipping perks for shoppers ahead of the holidays

In the fight for shoppers’ holiday dollars, retailers are increasingly touting perks like free shipping and easy returns.

Walmart said Tuesday it is expanding two-day shipping and in-store returns to many items sold by third parties on its website next month, just ahead of the busy holiday shopping season.

The move comes as rivals Amazon and Target have been improving their own shipping perks to persuade shoppers to pick them over the competition. When it gets down to the last minute, shoppers who procrastinate later this year will be flocking to the retailers that can get items to them fastest before Christmas.

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Pier 1 consolidating three warehouses into one to improve gross margins

  • Fulfillment and operations fixes will play a major role in pulling Pier 1 out of the downward spiral of 11.4% same-store sales declines, said CEO Alastair James on an October earnings call.
  • James said “pool distribution,” speeding up fulfillment and consolidating three warehouses into one Columbus, Ohio facility — which happened three months ago — will bring greater speed and efficiency needed to re-engage customers in-store.
  • CFO Nancy Walsh named “higher supply chain costs” among the factors putting pressure on gross margins, and the company is evaluating whether tariff hikes could hit margins further.

Pier 1’s “pool distribution,” in which one truck delivers to more than one location, is expected to double store delivery days to twice per week and meant to reduce stockouts and increase the chain’s ability to replenish stores quickly, said the CEO.

James also mentioned the warehouse consolidation as a source of increased efficiency. “The newly configured space which moves us from three buildings down to one is enabling faster processing, improved accuracy, and smarter packaging. We’re now positioned to take the learnings from this transformation and bring this model for the remainder of our supply chain network over time,” said James.

But there is still a serious element of uncertainty behind these strategies to increase efficiency and boost margins since Pier 1 relies so heavily on imports from China. “Approximately 59% of our sales in fiscal 2019 are expected to be generated from goods produced in China. And about half of that will consist of product classes that are subject to the 10% tariff that went into effect last week,” said Walsh.

He added that the retailer is “evaluating” the effects of tariffs in the new year, when they will rise to 25%.

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Global Postal System Fast-Tracks Rate Review After Trump Pullout Threat

By Heidi Vogt

Discounts established to help less-developed countries have continued to apply even as China has become a major e-commerce shipper.

WASHINGTON—A Trump administration threat to pull out of a global mail system over its discounted shipping rates from China could spur a change in those rates as early as April, the head of the United Nations agency that oversees the system said.The U.S. last week started a year long process to withdraw from the 144-year-old Universal Postal Union because it had failed to eliminate international discounts. Those discounts, aimed at helping developing countries, have continued to apply to China even as it has grown to become the world’s second-largest economy. They can make it cheaper to ship small packages from China to the U.S. than from locations within the U.S.

The move was the latest salvo by the Trump administration against China and a reminder of the president’s willingness to abandon international organizations that he says don’t help U.S. interests. American manufacturers welcomed the move, saying the flood of cheap goods from China undercut their business. The UPU, which is now holding previously scheduled council meetings, commissioned a report Tuesday that is the first step toward fast-tracking new rates, Director General Bishar Hussein said in an interview.

“If we work fast enough, and the member countries are all in consensus on these issues and decisions are made, by April next year I think it is a possibility,” Mr. Hussein said.The discounts also benefit countries including Russia and Mexico. The U.S. has stressed that its decision isn’t only about China, though that obviously is a large factor. Administration officials have said the lower rates cost the U.S. Postal Service some $300 million a year, with discounts ranging from 40% to 70%. Mr. Hussein said he welcomed the move by the U.S. if it manages to reform the group’s “archaic” rates.

“Now with the U.S. coming in and saying, ‘Sorry, enough is enough,’ I think this is going to take the conversation to another level, and I’m very happy to see that,” Mr. Hussein said.

Mr. Hussein stressed that even a fast-tracked process has many steps, including the research report, a proposal and a vote by members. At least half of the organization’s 192 members have to vote for a proposal to be considered, and it can pass only with a two-thirds majority.

If the U.S. were to withdraw from the UPU, it would lose access to global processing and coding systems that make international mail possible, and it would have to negotiate bilateral postal agreements with every individual country, Mr. Hussein said. The U.S. has said it hopes to negotiate a solution that keeps it from having to withdraw from the UPU, but also has said it is proceeding with a plan to institute “self-declared” rates that could take effect within six months.

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Target Rolls Out Free 2-Day Delivery Ahead of the Holidays

The big-box brand with the bullseye dog are at it again, putting a target on competitors’ backs.

In the never-ending pursuit of Amazon and seeking separation from other foes like Walmart, Target has announced the availability of same-day delivery in 46 states ahead of the peak holiday season from Thanksgiving through Christmas. The company is also offering free two-day shipping plus curbside pickup on hundreds of thousands of items with no purchase threshold, from Nov. 1 to Dec 22.

Frank Poore, CEO of ecommerce software firm CommerceHub, said the continual push toward “free” and “fast” by the big three just raise the pressure on the rest of the field to keep up, citing Walmart’s non-subscription-based program and incentives for store pickup, in addition to Target.

Read the article here.

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Deloitte Study: Holiday Shoppers Hooked on Fast and Free Shipping

According to Deloitte’s 33rd annual “Holiday Survey” of consumer spending intentions and trends, for the second consecutive year, 88 percent of survey respondents prefer free shipping over receiving their holiday packages faster (12 percent).

The majority (61 percent) of holiday shoppers report they will buy items that qualify for free shipping this season. For free shipping, two-thirds (66 percent) are willing to wait 3-7 days for their merchandise. More than 3 in 5 people surveyed (62 percent) define “fast shipping” as two days or less, up from 54 percent in 2017. One-quarter (25 percent) define three to four day delivery as fast shipping, down from 35 percent in 2017. Among the reasons for shopping in stores, 47 percent of respondents said it was to “avoid shipping costs.” Their No 1. reason to shop online is “convenience” (77 percent) followed by “free shipping” (72 percent).

Read the article here.

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What Target’s Free 2-Day Shipping Means For Other Retailers

Target’s free shipping perk creates additional pressure on everyone to race to the common denominator — which is fast, free shipping.

It’s clearly a conversion driver for retailers and sets the longer term implication that fast, free shipping is going to be expected as the standard at all times and on all items. It’s surely becoming the norm and retailers have to be extremely efficient in order to be successful because of the high cost of shipping. All signs indicate this will be competitive holiday season.

Read the article here.

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Managing Through Record 2019 USPS Rate Increases

Recently, the USPS proposed a record price increase. If approved, which is expected, the higher rates will go into effect on Jan. 27, 2019. This will be the biggest rate increase in USPS history. Amazon’s retail operating income would take a 5 percent hit from shipping cost inflation if the new rates take effect, according to Barclays.

Here are some of the significant proposed 2019 USPS Shipping rate changes:

  • The elimination of Commercial Plus Pricing (CPP), where now Priority Mail pricing will match Commercial Base Pricing (CBP). Many e-commerce and subscription trade shippers will be facing a painful price increase with the elimination of CPP programs.
  • A conservative 5.9 percent Priority Mail increase is expected, while First Class Flat Pricing will change to zone-based pricing with an expected 11.9 percent increase. For shippers with a high proportion of outer zone shipments, the increase will be appreciably higher (as much as 21 percent).
  • Perhaps most concerning is the pending reaction of UPS and FedEx as they re-evaluate their “hybrid” postal delivery products that use the USPS for last-mile delivery. Buried in the postal rate change are increases ranging from 9 percent to 30 percent on the work-share rate structures used by UPS and FedEx.

Read the full article here.

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16 Fulfillment Metrics Every Ecommerce Company Should Monitor

“If you cannot measure it, you cannot improve it,” said famed British physicist Lord Kelvin about scientific experimentation over 100 years ago.

It’s still pertinent today as you seek to improve ecommerce operations, remain competitive and improve our profitability and customer service. In order to improve operations, you first need to measure key fulfillment metrics such as total cost per order (CPO), shipped cost per carton, cost per line and cost unit. Once you understand what these metrics show, you can then develop options for processes that reduce steps and cost, or improve service levels such as order turnaround time.

What key fulfillment metrics do you monitor and use to improve your performance? Here are 16 we recommend you use as a starting point.

Read the article here.

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