In mid-August, fashion brand retailer Gap Inc. branched out into third-party logistics. The company launched a fulfilment service called GPS Platform Services, which targets other retailers.
The range of services offered includes next-day and two-day shipping, short-term storage and cross-docking and reverse logistics. Users access it through a self-service portal with API integrations to major e-commerce platforms including Amazon and Shopify.
Gap is using its own logistics infrastructure to offer other retailers an omnichannel network that spans the United States. It operates a network of 13 distribution centres in North America with a capacity to process 1 billion units in a year, according to the company.
“For the first time, we are making Gap Inc.’s fast, flexible, and highly automated logistics and fulfilment network available to brands of all sizes through GPS Platform Services,” declared Gap’s supply chain head Kevin Kuntz in a LinkedIn post.
He stressed that the GPS Platform was only selling its excess capacity “with a high buffer built in.”
The retailer has beefed up its network this year. In January it owned five warehouses and was leasing another three.
Further investment in the logistics arena is on the cards. During an earnings call with financial analysts in March CFO Katrina O’Connell said that management was planning to use US$700 million for capital expenditure this year that would focus on supply chain and technology projects to improve speed and efficiency in the company’s fulfilment network.
Gap is not the only large American retail brand that seeks to leverage its logistics infrastructure and capabilities with other shippers. A few days before the unveiling of GPS Platform Services, American Eagle Outfitters (AEO) officially launched its Quiet Platforms, a collaborative platform for brands and retailers to ship their products.
Unlike GPS Platform Services, this is not designed chiefly to boost the utilization of AEO’s warehouses and trucks. Quiet Platforms pools the carrier contacts of the brands and retailers that are participating in the venture and send out parcels using a universal delivery label.
At its official launch, Quiet Platforms could leverage some 40 carriers, ranging from small local and regional operators to international behemoths DHL eCommerce Solutions and international parcel shipping and mailing company Pitney Bowes.
The latter two were not brought into the fold by participating shippers. They were strategic signings made by Quiet Platforms management.
On the user side, the venture kicked off in August with about 60 participants, ranging from small retailers to brands like Peloton, Steve Madden and Li & Fung.
Shekar Natarajan, executive vice-president and chief supply chain officer of AEO and head of Quiet Platforms, stated that the concept was borne out of the disruptions since the Covid-19 outbreak in order to find a more reliable, flexible and sustainable solution. At the same time, this should be more efficient than the established channels and deliver cost savings.
“We’re levelling the playing field by offering high-quality delivery experiences without prohibitively high investments in management and technology infrastructure. Our ecosystem also gives carriers the opportunity to reach a wide range of new customers without lengthy lead times or complexity,” he said.
At the heart of Quiet Platforms is Quiet Logistics, a 3PL that AEO acquired last November for $350 million. The company was providing same- and next-day service utilizing a network of fulfilment centres in Boston, Chicago, Los Angeles, Dallas, St. Louis and Jacksonville. In early August new fulfilment facility opened in Atlanta.
Quiet Logistics has also been quite active in the use of technology, using advanced robotics and smart sortation technology in its fulfilment centres as well as advanced network management tools. The network dynamically manages performance at the shipment level to find the best possible routing decision for every parcel in the system, based on delivery commitment, quality of service and cost.
Quiet Platforms claims that this means it can deliver parcels 1-2 days faster and attain cost reductions of up to US$1 per parcel. In part, this is attributable to the use of technology, in part due to the absence of investment in delivery fleets.
Eytan Buchman, the Jerusalem-based chief marketing officer of Freightos, sees the collaborative ventures of AEO and Gap Inc. as part of a broader trend among shippers to get a better grip on supply chains and leverage assets.
“Taking advantage of costly infrastructure or manpower to improve revenue and profitability makes sense, especially in today’s market. This isn’t limited to last-mile fulfilment. For example, CastleGate is a full end-to-end logistics solution built under the Wayfair umbrella. And an increasing number of global companies are building up an internal freight forwarding business, both internally focused (like Inditex’s Fashion Logistics Forwarders) and those oriented towards bringing in new business as well,” he said.
The concept also tallies the growing call for supply chain collaboration that can extend to competitors to work together in non-competitive arenas.
Forwarders eye such developments warily.
“This is potentially hard for forwarders,” said Buchman. “The reality is that while retailers can build or acquire a forwarder arm and even sell their services to other shippers, few forwarders will ever branch out into either retail or buying ocean liners.”
Gap’s GPS Platform is one project alongside others that aim to leverage the company’s supply chain as well as technical and digital capabilities and customer insights. These include media networks, uniform and promotional apparel and supply chain services.
It remains to be seen how many shippers will be interested in multiple engagements with Gap, so forwarders probably shouldn’t be too concerned about the firm’s non-logistical ventures. Still, the sight of shippers taking active roles in supply chain management that cater to other shippers, while carriers are digitizing booking and selling channels to shippers, must be a concern for them.
By Ian Putzger
Air Freight Correspondent | Toronto