Supply Chain Tech Monthly Roundup — April 2022 — Amazon vs Everybody

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Supply Chain Tech Letter

9 min readMay 1, 2022

Topic of the Week: Amazon vs Everybody

Welcome to the April monthly roundup of the supply chain tech industry where I’ll be providing quick tidbits and links about recent logistech news around companies, supply chain, trends, and innovation.

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In this month’s roundup:

Amazon vs Everybody
Fundraising, M&A, and Stocks
Company News
State of the Industry
Companies Hiring

Amazon vs Everybody

Amazon is opening its Prime delivery services to other retailers. This month Amazon announced a new service called Buy with Prime. Essentially, the service will allow third-party sellers to tap into Amazon’s beast of a logistics network to fulfill orders from their own site. Sellers will be able to place Prime badges next to items that can be shipped via free two-day or next-day shipping. They will pay to have their inventory stored in Amazon’s warehouses and to use Amazon’s shipping operations. Analysts speculate this will compete with the other major carriers FedEx, UPS, and USPS. Eventually, Buy with Prime will be expanded to merchants that don’t sell on Amazon at all. Bob O’Donnell, founder and chief analyst at Technalysis Research, made a good point that AWS was started as an internal tool at Amazon and has become one of their biggest sources of revenue. They are now doing a similar move with their supply chain operations.

American Eagle is pitching a frenemy network to its retail peers. The aim is to convince businesses to work together and pool resources to operate on an Amazon-like scale. Their Chief Supply Chain Officer, Shekar Natarajan, says “Collectively, we can have the same [package] volume as Walmart. … And that way, companies are only competing on what they do best, which is the product, marketing, and customer experience.” In 2021, American Eagle acquired AirTerra, a parcel shipping startup based in Seattle, and Quiet Logistics, which operates multiple warehouses across the country. They are calling this new internal branch of their company, the Quiet Platform. It will operate separately from its retail division. They currently have 50 customers and are hoping to grow the customer base to 250. AE expects to break even on its supply chain business this year. “I’m essentially trying to create Amazon-like capabilities and cost advantages, without being Amazon,” says Natarajan.

Shopify plans to acquire e-commerce fulfillment startup, Deliverr. It is expected to cost Shopify between $2.3 billion to $2.7 billion as Deliverr was last valued at $2 billion after their Series E in November. Deliverr helps e-commerce merchants offer faster delivery by allowing them to utilize their warehouse network. Deliverr uses data to predict where customers are located that may order particular items and then strategically places those items in their warehouse network to facilitate fast delivery. Shopify has been aiming to build a similar software platform for their fulfillment network but it has proved to be harder than they thought. On their earnings call in February they announced their goal is to give their merchants the ability to offer two-day delivery to 90% of the US. This would put them into the league with Amazon but Shopify’s former employees and other fulfillment experts say that Shopify is currently nowhere close. This acquisition will hopefully help with that.

Amazon is still struggling to make drone deliveries work. Amazon has been facing challenges regarding its drone delivery program including high employee turnover and potential safety risks. Reportedly, there have been five crashes over a four-month period one resulting in a brush fire. Nearly 10 years ago Jeff Bezos announced 30-minute drone deliveries which have yet to come to fruition. Former employees have also raised flags about safety concerns, performing flight tests without full flight teams, using inadequate equipment, and assigning multiple roles to one person. For further reading here’s an article that talks about how Google and Walmart have jumped ahead of Amazon in terms of drone delivery.

Fundraising, M&A, and Stocks

Convoy, a digital freight network, raises $260 million. The funding is comprised of a $160 million Series E led by Baille Gifford and T. Rowe Price. It also includes a $100 million venture-debt investment from Hercules Capital. Convoy also got a new $150 million line of credit from JP Morgan. The company plans to use the funding to accelerate the development of its products. Founder and CEO of Convoy, Dan Lewis, talks about their recent $260 million Series E round on Twitter.

Instabox, an automated parcel locker service, raises $160 million in a growth equity round. The round was led by Verdane. Existing investors Creades, EQT Ventures, Tham Special Investment AB, Nineyards, Tacito, and M2 Asset Management also participated along with some new undisclosed investors. The new funding will be used to continue to invest in their sustainable solutions, improve their tech stack, and further expand throughout Europe.

Agility Robotics, a warehouse robotics company, raises $150 million in a Series B round. The round was led by DCVC and Playground Global. It also included the Amazon Industrial Innovation Fund. The money will be used to help accelerate the delivery of the next generation of Agility’s robots. The company also plans to double its headcount by 2024. They have opened a new office in Pittsburgh and have expanded operations in their Oregon and Palo Alto facilities.

Shipium, an Amazon-like supply chain tech provider for retailers, raises $27,500,000 in Series A round. The round was led by Insight Partners. The company was founded in 2019 by former Amazon Prime and Zulily supply chain employees. Jason Murray, co-founder and CEO, worked for Amazon for nearly 20 years with a particular focus on how to make fast shipping affordable. The software gathers data to determine the cheapest and fastest shipping method for retail packages. The latest round brings their total funding to $38,700,000. The company plans to use the additional funding to add to its engineering, sales, and marketing teams.

Three new supply chain funds were announced in April:

Amazon Industrial Innovation Fund — $1 billion with a goal to “spur and support innovation in customer fulfillment, logistics, and the supply chain”
Construct Fund II — $300 million to invest in companies operating in industries “that provide us with the food we eat, the products we need, and the critical services — like transportation and delivery”
Plug and Play Supply Chain Fund I — $25.5 million to make investments in Series A — C startups operating in the end-to-end supply chain space

Company News

Ford expands its partnership with Argo AI to focus on middle-mile deliveries. Ford’s CEO, Jim Farley, says that as a company they are becoming more interested in goods movement since it aligns with their commercial vehicle business. Ford has been working with Argo to pilot use cases using Ford vehicles. One includes a partnership with Lyft to launch self-driving vehicles in Miami and Austin as well as to conduct grocery delivery with Walmart in the same cities. They plan to expand the pilot grocery delivery program to Washington D.C. later this year.

Alphabet’s Wing launched drone delivery in Dallas at the end of April. According to the WSJ, this will be the company’s largest U.S. rollout and first drone initiative operated by a customer. Wing’s largest U.S. customer, Walgreens, will be staging deliveries from a store parking lot in Little Elm, Texas. Customers will be able to order from a list of 100 items through Wing’s drone delivery app. Customers will also be able to order ice cream from Blue Bell Creameries, first aid kits from Texas Health Resources, and pet prescriptions from easyvet vet clinics. These deliveries will be handled at a staging area in Frisco, Texas. The program is currently limited to suburban homes in Frisco and Little Elm. Wing employees are currently handling the operations, with the exception of Walgreens, but the company plans to have customers operate their own drone deliveries over time. The route planning and flights are autonomous but Wing’s human pilots will still oversee operations from California and Texas. Currently, no U.S. drone delivery company is certified to fly everywhere without a human controlling or monitoring the aircraft. The FAA is currently working on regulations to authorize these actions.

Instacart Won the Pandemic but Rivals Are Catching Up. From 2019 to 2020 Instacart’s sales soared 330%. But in 2021, Instacart’s growth slowed to 15%. Instacart’s share of the online grocery market has fallen to 30% from 40% while DoorDash gains market share. Part of the problem is that while the number of orders is growing the order amounts are smaller since customers aren’t staying at home as much anymore. Last summer, the company hired Facebook executive Fidji Simo as its new CEO replacing Instacart’s founder Apoorva Mehta. Instacart’s former and current CEOs both approached Uber and DoorDash for talks of a potential merger but no deal was reached with either of the companies. In March, Instacart slashed its valuation but still has plans for an IPO. The company is making moves in lots of areas such as offering warehouses (including ones designed for 15-minute deliveries), advertising, and in-store services. They are also placing an additional focus on customers who are likely to keep using the service such as those who order both food and non-food items and customers who have joined recently as opposed to during the beginning of the pandemic.

E2open closed its first public year with its stock down almost 30% over the past year. E2open reported $480 million in non-GAAP revenue for the year along with organic growth of 11%, $163 million adjusted EBITDA, and $0.24 earnings per share. Their trailing 12-month net subscription retention rate was 108% which includes upsells. In September, the company acquired Blujay Solutions, a logistics platform, and in March acquired Logistyx, a parcel shipping and fulfillment software. E2open plans on increasing its planned investments in sales, marketing, and channel development by $20 million this year.

State of the Industry

Will self-driving trucks make up 90% of long-haul trucking? Check out this Fortune article about self-driving trucks and their impact on efficiency and labor.

Food delivery apps are on the decline as customers return to in-person dining and become more budget-conscious during high inflation.

Experts say that companies that are looking to bring their production closer to home may not escape production problems.

What is the future of micro-fulfillment centers looking like? The anticipated rise in them may have been overstated as companies adopt a “you first” approach.

The White House put out a statement laying out the major achievements the Biden administration has made to expand and improve trucking jobs.

Amazon, Alphabet, Walmart, and other companies are rolling out drone delivery across America.

Check out this Stratechery interview with Shippo founder Laura Behrens Wu.

Pipedream closed a $1.6 million pre-seed round in October, you can read two threads about it from their CEO and CTO respectively.

Numbers:

According to a Roadie survey, 99% of retailers will offer same-day delivery by 2025
Prologis says the US market needs 800 million square feet of incremental space and forecasts that warehouse rent will increase by 22%
DispatchTrack survey found that 66% of respondents saw on-time delivery as the key to a positive delivery experience ahead of order accuracy, item condition, quick delivery, and a courteous delivery team
Private investors have invested over $9 billion in U.S. self-driving trucking companies

Audio recordings/podcast episodes to check out:

FreightWave’s Future of Supply Chain event starts on May 9th and will be streaming live for free.