How Walmart Finally Entered New York City…Without Opening A Single Store.
Earlier this month, news broke that Walmart acquired package delivery startup Parcel, which will allow them to offer last-mile same-day delivery in New York City. The young Brooklyn-based company already boasts clients such as Bonobos and Chef’d. The retail giant, which also acquired startup Jet.com last year, will now be able compete in the brutal New York e-commerce market. Walmart has struggled to establish a brick-and-mortar presence in NYC, and now, by writing one check, they’ve achieved their goal.
This matters because speedy fulfillment and delivery time has become a “must-have” for consumers. It used to be that consumers would make purchase decisions based primarily on price, quality, and selection. Now delivery speed has become just as, if not more, important than those. And that catapults logistics to the forefront of the consumer economy. And not just e-commerce.
We’ve been watching this trend for some time. In July, we wrote about the effects of e-commerce on ocean freight. Also in July, we talked about how startups provide the ideas and fuel for innovation. This news from Walmart and Parcel proves that the key to the consumer revolution is a parallel revolution in logistics.
But this acquisition wasn’t just about a big fish eating a small fish. In fact, it is directly relevant to the freight forwarding business. Here are three key takeaways from the acquisition:
- It was all about data: Parcel already has a massive database of buildings in NYC, including what door to use at a given address. That’s data that Walmart doesn’t have to build out themselves. If you’re a freight forwarder having the right data can give you a similar advantage over competitors and allow you to leverage your existing strengths with additional knowledge.
- …But not just data: Data is only useful if it is used in conjunction with highly efficient systems and execution. In other words, every company in the supply chain, including (perhaps especially) freight forwarders, must explore, adopt, and integrate new technologies that allows them to use data to improve operations. Data alone does not drive growth. But when integrated properly, it can be key to increasing efficiency, margins, profits.
- It still comes down to people: No matter how well Parcel and Walmart systems integrate, in the end its success will come down to people. Parcel’s last-mile solution still relies on delivery boots on the ground. And as you trace products back up the supply chain, the human component of freight forwarding is just as important. E-commerce is making extraordinary demands on ocean freight requiring solutions and strategies that require human ingenuity. We’ve written about AI recently and, suffice to say, the robot overlords haven’t taken over just yet.
As we recently wrote in our post about Flexport, who just raised more than $100 million on a valuation of nearly $1 billion, the actions of big companies may seem intimidating to smaller companies like freight forwarders. But we believe, now more than ever, technology is the “rising tide that lifts all boats.” The resources and attention that are being directed at logistics (and specifically ocean freight) will surely be a long-term benefit to every freight forwarder.
Download the free CoLoadX whitepaper, “Logistics as a Service: How it Will Transform Your Ocean Freight Business” and see how LaaS will help your company grow.