Sent Items #108: Friday, December 4, 2020
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Hi All!
I hope everyone had a nice and safe Thanksgiving weekend. We’re into the final few weeks of the year, and boy can we not wait to flip the calendar!
Those who’ve been subscribed for some time know that I typically send these over the weekend, but given the rush of headlines this week I didn’t want anyone heading into the weekend without an update on all that’s been going on in the world of ecomm+logistics.
Results have begun to trickle out on the successes of the “Cyber 5” holiday weekend. While many headlines suggest that ecommerce sales were softer than anticipated - a measly 22% increase for Black Friday and 15% for Cyber Monday, both YOY - it is clear that shoppers have heeded the advice of experts (maybe us, a bit?) and have begun purchasing earlier to avoid the inevitable disruptions that we began to see this week.
According to Adobe 41% of consumers say they would start shopping earlier than they had in prior years. The pull-forward in demand was compounded by this year’s unofficial start to the holiday shopping season, Amazon’s Prime Day, which fell in October. This clearly encouraged other retailers to begin promotions earlier.
Shopify also saw holiday shopping start earlier than ever before, with daily total sales increasing 19 days before Cyber Monday, nearly two weeks earlier than previous years. In fact, in the week leading up to Cyber Monday, from November 23 through November 30, sales increased by 84% from 2019.
Here’s a great chart from Stifel using data from Adobe showing YOY growth 2018-2020 across each of the “Cyber 5” shopping days:
For those who ship with UPS Surepost or FedEx Smartpost, I would strongly encourage you to wind down utilization of those services by early next week. Moving to UPS Ground or FedEx Ground will buy you a couple days and priority in their chain. As a reminder, you can find my suggested holiday cutoffs in this google doc.
Finally, here’s a great long-form read from Recode’s Jason Del Rey on the death of the department store and the American middle class.
- Matt
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Fastest Ground Ever project takes one business day off millions of nationwide deliveries
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The initiative, Fastest Ground Ever, was launched during the first week of November. All lengths of haul are affected by the change. However, 63% of its ZIP code-to ZIP code lane improvements have been in what the company characterizes as “one- to three-day transit lanes,”. For millions of commercial and residential shipments, that means an original three-business-day transit time will be compressed to two, and two business days down to one.
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UPS CEO had telegraphed the changes during her first two analyst calls after taking the position on June 1. To expedite the program’s progress, UPS authorized the pull-forward of $750 million in capital expenditures originally slated for 2021, delivering in three days or less to 90% of the U.S. population.
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By compressing nationwide transit times, UPS staves off competitive disadvantages with FedEx, satisfies its biggest customer - Amazon - and ensures greater likelihood that Amazon packages remain within the UPS network.
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FedEx announced it has agreed to acquire ShopRunner, the ecommerce platform that connects online shoppers with their favorite merchants and brands. ShopRunner’s capabilities will complement and expand the FedEx ecommerce portfolio.
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ShopRunner connects millions of consumers to more than 100 of their favorite brands, offering a seamless shopping experience across merchants, from inspiration through delivery. Members enjoy benefits including free two-day shipping, free returns, member-exclusive discounts, and seamless checkout. ShopRunner’s data-driven marketing and omnichannel enablement capabilities also help merchants acquire high-value customers and accelerate their digital innovation by using ShopRunner’s ecommerce platform.
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Somewhat ironically, not mentioned in the article is that UPS Capital had invested in ShopRunner in an earlier round.
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KKR is nearing a deal for a portfolio of U.S. warehouses, a sector that has received a boost during the pandemic as consumers increasingly turn to ecommerce. The transaction, which may close as soon as next week, values the roughly 100 properties at more than $800 million.
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The warehouse portfolio set to be acquired by KKR is part of a broader wager by the company, increasing its exposure to the sector to about 30 million square feet.
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Delivery giant instructed drivers not to pick up some packages on Cyber Monday as pandemic fueled online shopping
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UPS on Cyber Monday notified drivers across the U.S. to stop picking up packages at six retailers, including L.L. Bean, Hot Topic, Newegg and Macy’s.
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The temporary limits, which some drivers say they haven’t seen during previous holiday seasons, are a sign that UPS is metering the flow of packages into its network to preserve its performance during one of the busiest shipping weeks of the year. The National Retail Federation estimated that online shopping jumped 44%.
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Some retailers are warning customers to shop early and expect longer delivery times this holiday season.
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Abercrombie & Fitch tells online shoppers to place their orders by Dec. 4 if they want items to arrive by Christmas using its standard shipping option.
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Today, Atlanta-based Stord hit a new milestone: With shipping surging in advance of the holidays and customers expectations for lightning fast delivery at a fevered pitch, the company raised $31 million, led by Peter Thiel’s Founders Fund.
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The new funding brings Stord’s total investment to $46 million, and its valuation to roughly $200 million. Henry now says he hopes to join the ranks of Under 30 founders with companies on Forbes’ Next Billion-Dollar Startups list. Revenue is expected to approach $50 million this year, a roughly seven-fold increase over last year, and Henry expects it to surpass $100 million next year.
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Rather than owning warehouses, Stord uses software to connect businesses in need of storage and distribution to independent warehouses with excess capacity. It manages everything from ordering to inventory management to billing on its proprietary software.
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Henry says that the company is now moving close to $10 billion worth of product across the country, and has developed a cloud-based software platform that connects a network of more than 500 warehouses and over 20,000 carriers.
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Speaking of on-demand warehousing, another player in the space, Flexe, announced a $70 million raise earlier in the week. The capital infusion was led by T. Rowe Price and brings total raised by Flexe to $134 million, following its $43 million round in 2019.
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Founded in 2013, Seattle-based Flexe will use its new funding to invest in its team and technology, building solutions that help enterprise-class retailers and brands better execute flexible omnichannel operations. Flexe plans to invest in that WMS product and extend its capability to handle more complex order profiles, which increasingly include more SKUs per cart and require omnichannel fulfillment from a variety of channels. Other new initiatives will include expanding its ability to provide dashboard and analytics tools and to build out its connections to additional transportation providers.
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Independent businesses selling on Amazon—nearly all of which are small- and medium-sized businesses—surpassed $4.8 billion in worldwide sales from Black Friday through Cyber Monday, an increase of over 60% from last year.
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More than 71,000 small- and medium-sized businesses worldwide have surpassed $100,000 in sales this holiday season to date.
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American small- and medium-sized businesses have sold an average of 9,500 products per minute this holiday season to date.
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Independent businesses selling on Amazon worldwide have created an estimated 2.2 million jobs.
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Shopify announced today Black Friday/Cyber Monday weekend results, with sales of $5.1+ billion from the more than one million Shopify-powered brands around the world. From November 27 through November 30, total sales grew by 76% from the $2.9+ billion reported for Black Friday/Cyber Monday weekend in 2019, a record that was surpassed this year on Saturday, November 28, at 5:00pm ET.
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In addition to this record-setting weekend, Shopify saw holiday shopping start earlier than ever before, with daily total sales increasing 19 days before Cyber Monday, nearly two weeks earlier than previous years. In fact, in the week leading up to Cyber Monday, from November 23 through November 30, sales increased by 84% from 2019.
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44+ million consumers globally purchased from independent and direct-to-consumer brands powered by Shopify, a 50% jump from 2019. Consumers spent $89.20 USD on average per order throughout the Black Friday/Cyber Monday weekend. Mobile sales stayed relatively flat this Black Friday/Cyber Monday compared to last year, with 67% of sales made on mobile devices versus 33% on desktop, compared to 68% of sales made on mobile devices versus 32% on desktop in 2019.
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If the key to Amazon’s success has been to put the customer first, for Shopify the key has been to put the merchant first, or as they like to say, “Amazon is trying to build an empire, and Shopify is trying to arm the rebels”.
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Founded in Ottawa in 2006, Shopify started out as a simple maker of ecommerce websites. Store owners, instead of having to worry about all the technical complexities that go with processing payments, managing checkout flows and working with JavaScript, could upload some pictures of their wares to Shopify, set prices, provide their bank account information and start selling. Over the next 15 years, as ecommerce grew from novelty to part of daily life, Shopify grew with it.
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Today, Shopify’s a public company with a market capitalization that exceeds $100 billion. Its products include Shopify Capital, which provides funding to merchants that use its platform, and Shop Pay, a checkout process for customers, which has more than 60 million users. Last year, it surpassed eBay to become the No. 2 ecommerce destination in the United States, with nearly 6% of sales, compared to Amazon’s 37%.
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Great long-form read on the origins and mission of Shopify.
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The company has added 427,300 employees in 10 months, bringing its global workforce to more than 1.2 million.
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Amazon added 427,300 employees between January and October, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. Its number of workers now approaches the entire population of Dallas.
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Starting in July, the company brought on about 350,000 employees, or 2,800 a day. Most have been warehouse workers, but Amazon has also hired software engineers and hardware specialists to power enterprises such as cloud computing, streaming entertainment and devices, which have boomed in the pandemic.
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The scale of hiring is even larger than it may seem because the numbers do not account for employee churn, nor do they include the 100,000 temporary workers who have been recruited for the holiday shopping season. They also do not include what internal documents show as roughly 500,000 delivery drivers, who are contractors and not direct Amazon employees.
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