Warehouse Wisdom. Weekly.

Happy Friday!

Online marketplaces are engaged in a fierce battle, with smaller platforms doing everything they can to chip away at the 800-pound gorilla, Amazon. From Etsy on a mission to position itself as a go-to marketplace to Shopify adding new AI tools to give merchants a competitive edge - retailers get to feast on the spoils!

In this week’s edition, we cover the growth of online purchasing in B2B, LTL cost increases and parcel shipping cost declines, warehouse vacancies, and even AI taking on porch pirates! Get your negotiating cap on and let’s dive in…

LOGISTICS VITALS

MANUFACTURING & THE US ECONOMY SHOW MIXED SIGNALS

Institute for Supply Management Manufacturing Report (a reading of 50 or higher indicates growth):

US Economic Growth and Inflation Sentiment:

MARKETPLACES

B2B & B2C SALES PLATFORMS FLEX THEIR MUSCLES

Great news for B2B product-based businesses – according to Amazon’s latest B2B E-Commerce in Evolution Report, a whopping 91% of B2B buyers prefer online purchasing and 68% of buyers plan to purchase at least 40% of their goods online! This is the kind of news that will make you start licking your chops – just be sure you’re able to deliver to both businesses and residential addresses, since it’s also expected that 58% of B2B buyers will have deliveries made to employee’s personal residences.

And not too shabby news for B2C retailers selling on eBay as well. AI-generated content in “magical listings”? Automated online offers that sellers send to customers through eBay’s messaging platform? Managing shoppable posts on Instagram and Facebook? These are some of the valuable tools that eBay is implementing to help startups and smaller sellers grow their storefronts. Topping it all off is eBay Live, a new livestream shopping experience. Sounds intriguing to help sellers diversify from Amazon…

But don’t sleep on TikTok and social media in general – the growing Gen Z ‘fav’ is testing features that identify products in videos and suggest similar items for sale, opening loads of opportunities for merchants. With 40% of consumers spending on social channels overall, expect to see more and more tools to grow sales on the horizon.

SHIPPING

LTL & PARCEL RATES MOVE IN OPPOSITE DIRECTIONS

Before you start jumping for joy over sales channel growth, take a quick peek at the LTL pricing market. Saia announced a 7.5% general rate increase for less-than-truckload (LTL) and truckload shipments that will go into effect starting December 4, 2023. Ouch! But what hurts even more is that this is only the first of what is expected to be many similar announcements from other rival LTL carriers. If you use LTL or truckload freight, it’s time to start budgeting for noticeable bumps in pricing. But…

If parcel shipping is your thing, the ball is in your court. According to the TD Cowen/AFS Freight Index, ground parcel rates experienced their first year-over-year decline since 2019! It appears the ‘negotiating tides’ have turned slightly in the favor of shippers, with larger pricing discounts and reductions in added fees and fuel surcharges more prevalent. Are you a UPS shipper? The company just announced revenue, profit, and mail volume declines in Q3. Now just might be the time for a conversation with your small parcel rep, so make sure you urge them to sharpen their pencils on pricing, and you might just lock into some better rates for the coming year.

COMMERCIAL REAL ESTATE

US & CANADA VACANCIES SHOW SIMILAR GROWTH

While freight gives mixed signals on pricing, more signs of weakness are brewing in the industrial warehouse space industry. The latest data from one of the top markets in the country is echoing similar sentiments from the nation overall. Crain’s most recent report showed Chicagoland warehouse vacancies to have increased again to 5.2% in the third quarter of this year. The US national vacancy rate paints a similar picture at 4.6%. The good news? A softening market for tenants means lower potential rates and more concessions from landlords. If you’re going to be on the hunt for warehouse space in the upcoming year, this is welcomed news, and by no means something specific to the US, as reports of a 2.1% increase in vacancies have popped up across the Canada.

WAREHOUSE OPERATIONS

INVENTORIES & VISIBILITY TOP WAREHOUSE MANAGER’S MINDS

Now that warehouse rent negotiations are taken care of, what do warehouse managers care about most over the next three years? Apparently, optimizing inventories is top of mind. 68% of the respondents of McKinsey’s Supply Chain Pulse survey said this was their most important priority. The challenge? While supply chain mangers know that keeping the right inventory levels and having risk buffers for stock is imperative, they don’t know what the right inventory strategy of the future looks like. Will it be increasing inventory? Keeping inventory lower? No doubt data visibility is key.

WAREHOUSE TECH

DELIVERIES & WAREHOUSE BUILDINGS TAKE FUTURIST FLIGHT

Speaking of visibility, here’s an intriguing way that AI could help the warehousing and logistics industry – using real-time data and analytics to “watch” deliveries and stop porch pirates in their tracks!

And if battling porch pirates with computer bots doesn’t intrigue you, perhaps a futurist investigate warehouses will do the trick. Sometime soon businesses might be able to lease a multi-story warehouse, with drone delivery, automated packing, and sustainable construction. That’s precisely what national design firm Ware Malcomb produced as a potential future mockup. A 5-story warehouse caulked full of precision parking for delivery drivers, delivery drone accessibility, and honeycombed skin that generates wind and cools the building’s exterior? It's worth checking out the rending of this potential new warehouse for sure! Only time will tell…

WAREHOUSE QUICK DELIVERIES

HOW RETAILERS REALLY PAY FOR FREE SHIPPING, & MORE…

• More retailers increasing product costs and minimum spending thresholds to cover free shipping

• Next up with a small business callout for online sales? Google…

• Are you a discount retailer? See what you can learn from Home Goods closing its online retail channel 

• Home decorating and pet furniture sales propel Wayfair’s Q3 earnings 

• Selling in Southeast Asia? Internet sales growth is decelerating

• Move over east coast port importing; hello west coast ports