UPS will cut 12,000 jobs to save money in 2024

UPS revenue declined in Q4 and 2023. The carrier says the planned job cuts will generate $1 billion in savings in 2024.

United Parcel Service Inc. (UPS) will cut 12,000 jobs this year, the carrier announced Jan. 30. That’s part of a plan to generate $1 billion in savings as revenue and package volume decline, CEO Carol Tome said.

UPS consolidated revenue declined 7.8% to $24.9 billion in its fiscal fourth quarter ended Dec. 31. Consolidated operating profit declined 22.5% during the same time period to $2.5 billion. For the full fiscal 2023 year, consolidated revenue declined 9.3% to $91 billion and consolidated operating profit declined 28.7% to $9.1 billion.

2023 was a unique and quite candidly a difficult and disappointing year for UPS. “We experienced declines in volume, revenue, and operating profit in all three of our business segments. Some of this performance was due to the macroenvironment and some of it was due to the disruption associated with our labor contract negotiations as well as higher costs associated with the new contract,” Tome told investors.

Thousands of online retailers worldwide use UPS for their fulfillment either exclusively or in combination with other carriers.

U.S. domestic segment revenue declined 7.3% to $16.9 billion in the quarter. Average daily volume (ADV) ended the quarter 7.4% below 2022 levels. However, that still represented a step up from an “exceptionally low third quarter” that preceded the period, Tome said. Revenue per piece of mail was slightly positive, the carrier said without revealing more.


Fastenal relies on digital for long-term growth

Customers of Fastenal Co. want more flexibility to order via multiple digital channels including a self-service web shop, vending machines and vendor-managed inventory systems. The industrial and construction supplies distributor says it will continue on its course of expanding its digital sales capabilities.

Fastenal announced its fourth quarter and full-year financial performance,  stating that the data created through their digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both themselves and their customers.

In a Q4 and year-end earnings call, Fastenal executives elaborated on the value of each of its digital channels including its FASTVend vending devices and FASTBin product bins, each of which Fastenal embeds with digital technology to track product sales; and what Fastenal defines as ecommerce, including self-service online purchasing via and electronic transactions conducted through EDI.

They also clarified during a Q&A period with investment analysts that the FASTVend and FASTBin services do not cannibalize Fastenal’s self-service ecommerce sales.

Dan Florness, president and CEO, noted that ecommerce sales have steadily climbed as a percentage of total sales, rising to about 25% in 2023 from about 5% several years ago.

For the fourth quarter, Fastenal said that all digital sales, including ecommerce and the FASTVend and FASTBin transactions which in aggregate make up what Fastenal calls its “digital footprint” accounted for 58.1%, or $1.02 billion, of $1.76 billion in total net sales. That’ s up  from 52% a year earlier. Fastenal didn’t break out total digital sales for all of 2023.

Fastenal also said that its digital purchasing options play a vital role at its Onsite vendor-managed inventory locations, which it manages at or near customers’ facilities. The company said it increased its number of Onsite locations by 12.3% last year to end 2023 with 1,822 active sites.


FordDirect rolls out a new dealership ecommerce platform

FordDirect, a joint venture the vehicle maker has with its dealers for marketing and technology initiatives, is rolling out a new ecommerce system.

Called The Shops, the ecommerce platform will provide Ford and Lincoln dealers and resellers with tools and features that enable them to link to pre-approved service vendors. Vendors can then help with tasks such as customer lead generation, warranty authorization and credit pre-approval, among others.

Specific vendors on FordDirect’s ecommerce platform include:

  • Better Car People, a comprehensive business development platform.
  • ComplyAuto, a dealership compliance software platform for privacy, security, safety/human resources, and finance and insurance.
  • OfferLogix, a credit pre-qualification service.
  • Velocity Automotive, reconditioning management software.
  • Volie, automotive call center software.
  • WarrCloud, a warranty processing technology platform.
  • Work Truck Solutions, commercial truck and van digital marketing and inventory merchandising tools.

According to FordDirect CEO Dean Stoneley, dealerships face an increasing demand for day-to-day resources, including meeting customer expectations, complying with regulations, managing employees, updating technology, and planning sales events. The auto industry in all its parts and aspects now transforms through technology, which makes dealers more challenged than ever to stay current while meeting their business goals. The Shops is now open to help Ford dealers and Lincoln retailers find the best vendors in the market for all of their needs.

Disney launches shoppable TV

Disney announced the launch of a beta program for its first shoppable ads. Consumers will be able to make purchases through the new Gateway Shop in Hulu while maintaining their viewing experience, according to Disney’s press release.

According to Jamie Power, senior vice president of addressable sales at Disney Advertising, with the most scale in streaming and the strongest audience signal through the company’s foundational data and ad tech stack, Disney is uniquely enabled to power dynamic ad experiences that connect consumer interest and intent to the purchase — straight from the stream.

Viewers will see personalized advertisements for products that are sent to phones through push notifications or email. Over the next few months, Disney will grow the interactive shopping features in streaming, Disney says.

The beta test will initially be available exclusively on Hulu, which Disney now owns, with plans to add Disney+ in the future, reports.

Disney named Unilever as one of the advertisers included in the initial beta test. The media company is searching for other retailers and consumer packaged goods companies to advertise, Ad Age reported.

Gateway Shop is an expansion of Gateway Go, launched on Hulu in 2020. The earlier feature gave viewers the option to get more information on an advertisement sent to their phone through push notifications, email, or a code. Since then, more than 200 advertisers across categories have signed on.

The goal is to help audiences connect with the brands they love with the least amount of friction, without disrupting the content they’re streaming.

Amazon, Walmart, and Home Depot are all experimenting with shoppable TV, too. Amazon tested shoppable ads during the first-ever Black Friday NFL game it streamed this year. Walmart inked a deal with NBCUniversal in November to place shoppable ads on the streaming platform Peacock. The ads gave consumers the chance to buy Walmart items featured in select Bravo shows. And Home Depot released a branded content series with Vizio in 2023.

57% of ad agency professionals believe shoppable video content is the next frontier of retail media, according to an April 2023 poll from Insider Intelligence.

‘Tsunami’ of holiday returns expected this year: Salesforce

Retailers are bracing for a surge in holiday returns after a record-breaking Cyber 5, starting on Thanksgiving and ending on Cyber Monday. Software provider Salesforce has forecast a “tsunami of returns” for the second year in a row as consumers have become more picky about what to leave behind from holiday shopping. The firm’s forecasts are based on an analysis of the activity of 1.5 billion consumers in 64 countries, reports.

Salesforce says the rate of online purchases that were returned doubled the week following Cyber 5 and has remained high ever since. The company predicts more than $131 billion in holiday purchases will be returned.

That figure encompasses returns of purchases made globally in November and December 2023. It is based on returns patterns in dollars and percentages from the 2022 holidays and the rest of 2023, Salesforce says.

Return rates will likely rise as high as 20% for a few weeks after the holidays into 2024 as people return gifts, says Rob Garf, vice president and general manager of retail and consumer goods at Salesforce. In 2022, global returns grew to 13% of total orders in the holiday period, an increase of 63% year over year.

Retailers largely corrected more generous return policies after the large increase last year to preserve profit margins, says Garf, adding that experts see retailers oversteering and negatively impacting customer service and experience. The returns experience must be easy, clear, and reasonable, or retailers risk brand loyalty and repeat purchases. He points out that a positive return process can be the first step in a new shopping process for a consumer. Meanwhile, a poor experience can make it the last time a consumer interacts with the retailer.

Returns can be a costly problem for retailers. Companies pay an average of $26.50 to process $100 in returned merchandise, The Wall Street Journal reported in May. In 2022, about 16.5% of retail purchases were returned, totaling about $816 billion, according to the National Retail Federation.

Rates are even higher for apparel, averaging 24.4% between April 2022 and March 2023, according to Coresight Research. That translates to about $38 billion in returned apparel in 2023, or the equivalent of all U.S. Cyber 5 spending this year.

The cost of processing a return of a specific item varies based on several factors, according to reverse logistics firm Optoro. For example, some apparel pieces may be out of style or out of season by the time the return is processed and cannot be sold for full price.

Merry Christmas!

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India’s B2B marketplace Udaan raises $340 million


Shopify News: earnings increase in Q3, checkout page gets faster

The ecommerce platform’s Shop Pay checkout option facilitated $12 billion in GMV in the quarter.

Shopify Inc. has reported total revenue grew 25% to $1.7 billion in its fiscal third quarter ended Sept. 30.

Meanwhile, gross merchandise volume (GMV), the total value of merchants’ products across Shopify’s systems, increased 22% to $55 billion. Gross profit also grew 36% to $901 million.

45 retailers in the Top 1000 use Shopify for a combined $8.30 billion in web sales annually. The Top 1000 is Digital Commerce 360’s database of leading ecommerce retailers in North America.

In the Next 1000, 74 merchants used Shopify in 2022 and accounted for $1.05 billion in web sales. The Next 1000 ranks the largest retailers after the Top 1000 (1,001 to 2,000) by web sales.

In an earnings call with investors Shopify president Harley Finkelstein talked about the important role of artificial intelligence for a present-day business. The company has integrated Shopify Magic, a suite of free AI-enabled features across its products and workflows, and merchants are already finding success with unblocking productivity and creativity. Shopify Magic enables personalized pages and content generation, it can help craft an About Us page in a merchant’s brand voice or tone.

Finkelstein also mentioned that the company had launched a new one-page checkout in September. In its first two months it has sped up buyer completion time by an average of four seconds.

In the quarter, Shop Pay facilitated $12 billion in GMV, which is a 50% year-over-year increase. Since launching in 2017, it has facilitated a cumulative $110 billion in sales.

Finkelstein also said Shopify Checkout has helped its merchant base through Checkout Extensibility, which launched in 2022. Since launch, Shopify has exponentially expanded its suite of APIs, components and capabilities. It has also seen more than 400 checkout apps in the Shopify App Store that support Checkout Extensibility.

In addition to that, Shopify announced a partnership with Amazon during the quarter, giving merchants the choice to offer Buy with Prime directly within their Shopify Checkout. Finkelstein said the app will release in Shopify’s app ecosystem in the coming weeks.

Walmart grew ecommerce sales 24% in Q2

Walmart Inc. announced Aug. 17 that U.S. online sales grew 24% for the fiscal 2024 second quarter ended July 28, 2023. International ecommerce sales grew 26%.

Comparable in-store sales grew more modestly, up 6.4%, excluding fuel over the same period. That’s above analyst expectations of 4.1% growth.

Total revenue grew too, by 5.7% to $161.6 billion.

Net revenue was up 6.6% for the first half of fiscal 2024 compared to the six month period last year, Walmart said. Revenue for the first half of the year reached $313.9 billion.

Online sales remain one of the fastest-growing areas of Walmart’s business. They grew about four times as quickly as comparable in-store sales in the same period. That’s on top of 27% year-over-year growth in Q1. More than 50% of digital orders are fulfilled by stores, Walmart said.

According to Walmart, pickup and delivery services drove the growth, similar to the retailer’s statement in Q1.

John David Rainey, chief financial officer, said in the call that the company liked the trends in ecommerce. Customers are increasingly counting on Walmart for convenience, and they’re visiting the  company’s app and sites more often.

Weekly active digital users grew 20% in the quarter.

Walmart is planning further online sales growth. The retailer plans to “densify their inventory at the first mile, make the middle mile as efficient as possible and then shorten the last mile”.

Sam’s Club, Walmart’s membership-based warehouse chain, reported ecommerce sales grew 18% in the quarter driven by curbside orders. Net sales, meanwhile, declined slightly, down 0.3%. Income from memberships grew 7%, Walmart said.

Walmart+, the retailer’s membership program in competition with Amazon Prime, also had “consistent growth,” the retailer said, noting the success of Walmart Plus Week in July without revealing more. The sales event drove record customer acquisition, Walmart said.

Walmart gained market share in grocery, while general merchandise sales declined “modestly.”

Consumers are purchasing more cooking tools to focus on cooking at home. They’re also buying more necessities and focusing on lower-priced items and brands.

Following the successful quarter, Walmart announced increases to its outlook for the rest of fiscal 2024. The retailer increased its forecast for consolidated net sales, with a forecasted increase of 4.0-4.5% for the full year, compared to 3.5% at the end of Q1 in May. Walmart also raised expectations for its consolidated operating income, from 4.0%-4.5% to 7.0%-7.5%.

For the second quarter ended July 28, 2023, Walmart reported:

  • Total revenue grew 5.7% to $161.6 billion.
  • Walmart U.S. ecommerce sales grew 24%.
  • Consolidated net income increased 56.5% to $8.1 billion.

For the first half of the fiscal 2024 ended July 28, Walmart reported:

  • Total revenue grew 6.6% to $313.9 billion.
  • Consolidated net income grew 37.2% to $9.9 billion.

Global shipping costs increase after 16-month falling

Spot rates for shipping containers jumped by the most in more than two years, which means that a 16-month slump in ocean-freight costs that helped ease the sting of goods inflation is over.

The Drewry World Container Index composite increased 11.8% to $1,761 for a 40-foot container. That’s the fourth straight advance and biggest week-on-week percentage gain since June 2021. The composite had fallen in 15 of the 16 months through June. It reflects short-term rates across eight trade routes connecting Asia, Europe and the U.S.

The costs for shipping from Shanghai to Los Angeles reached $2,322 per 40-foot container unit. That’s an 11.3% increase from the previous week and fifth straight increase, according to Drewry. From Shanghai to Rotterdam, the rate jumped 25% to $1,620, the most since January 2021.

Shipping rates jumped tenfold to record highs during the height of the pandemic. Consumers had shouldered household expenses and COVID-19 led to a blockage of logistics networks.

Since then, container shipping costs have returned to levels reached before the health crisis, which has recently declined due to bloated inventories and low consumer spending.

Matson Inc., a Honolulu-based container carrier providing an express service from China to the U.S. and charging a premium for the faster route, earlier this week said retailers are continuing to manage inventories carefully amid weaker demand.

Matson CEO Matt Cox said in the August 1 statement that in the absence of an economic hard landing in the U.S., they continue to expect trade dynamics to gradually improve through the end of the year as the transpacific marketplace transitions to a more normalized level of consumer demand and retail inventories stocking levels.

Last week, closely held French carrier CMA CGM SA laid out a gloomy outlook for the industry, especially on more established trade lanes. CMA CGM Chief Finance Officer Ramon Fernandez told reporters that East-West shipping routes are under more pressure and dropping faster than the North-South trade, which remains pretty dynamic.

Copenhagen-based A.P. Moller-Maersk A/S, the world’s No. 2 container carrier, is scheduled to release an interim report on Aug. 4 for its second quarter results, according to