Apparel sellers Gap Inc. and American Eagle Outfitters Inc. are betting their logistics expertise can bring in revenue alongside the sales of jeans and T-shirts, at a time when strains in supply chains are raising the importance of delivery reliability and speed.
The retailers want other businesses, including rival merchants, to use their warehouses and distribution networks to manage their flow of goods. The efforts echo the strategy undertaken by Amazon.com Inc., which operates its Fulfillment by Amazon warehousing and shipping service for third-party retailers even as it sells its own retail products online.
Supply-chain experts, however, say the retailers face hurdles pushing into the logistics market, including concerns prospective customers may have about data privacy and potentially giving up the competitive edge they may have when controlling their own logistics network.
“The customer fulfillment activities are so core to any retailer—any company, but a retailer in particular,” said Michael Dominy, vice president of supply-chain research at research firm Gartner Inc., because “you’re delivering that customer experience. So turning that over to somebody else is always challenging.”
San Francisco-based Gap recently launched what it calls GPS Platform Services, a logistics and fulfillment network open to other businesses. AEO, based in Pittsburgh, created a subsidiary called Quiet Platforms after acquiring logistics companies Quiet Logistics and AirTerra last year. Quiet Platforms offers fulfillment, logistics and transportation services to other brands.
The two companies are launching the platforms as questions over control of logistics operations have grown more urgent in the wake of pandemic-driven supply-chain disruptions that included port bottlenecks and other challenges that tied up inventory and cost some companies sales.
Some large retailers including Walmart Inc., Target Corp. and Costco Wholesale Corp. have moved to take greater control of their supply chains in the wake of the disruptions, including by chartering their own cargo ships to import goods.
Target added a third-party distribution component with its acquisition of Shipt in 2017 and offers the same-day delivery to other businesses.
Walmart entered the market in August 2021 with GoLocal, an effort to create a revenue stream by leveraging its own investment in rapid delivery to service the needs of other merchants. The company last week said it had reached more than 1 million shipments in the first year of operation.