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June 27, 2017

Wal-Mart warns motor carriers to stop hauling Amazon loads, consultant says

Wal-Mart escalates e-commerce "cold war" between two retail giants, Jindel tells SMC3 gathering.

By Mark B. Solomon

Wal-Mart Stores Inc. is telling its for-hire motor carriers that if they also haul goods for Amazon.com Inc., they will have to stop doing so in return for keeping Wal-Mart business, a leading transport and logistics consultant said today.

Speaking at the SMC3 annual summer conference in Palm Beach, Fla., Satish Jindel said Wal-Mart's warning is the latest step in what he called an e-commerce "cold war" between the two retail titans, which built dominant positions in different segments of the trade. It was reported last week that Wal-Mart had told some technology companies that if they want its business, they can't run applications for the retailer on Amazon.com Inc.'s cloud-computing service, Amazon Web Services, and instead must use Redmond, Wash.-based Microsoft Corp.'s cloud service, known as Azure.

Jindel, who made a presentation on Amazon's take-no-prisoners rise to online retail dominance, said he became aware of Wal-Mart's actions through some of his sources. A Wal-Mart spokesman would not disclose the extent of the company's outside carrier relationships. Wal-Mart is a large user of trucking services, utilizing its private fleet, dedicated contract relationships with motor carriers, and the for-hire truck network. In an e-mail, the spokesman said Wal-Mart drivers log about 700 million miles annually, but wasn't specific as to whether that included drivers working on a for-hire basis.

Bentonville, Ark.-based Wal-Mart, which has badly lagged Amazon in e-commerce growth, is moving aggressively to narrow the gap. It bought fast-growing e-tailer Jet.com Inc. last August for $3.3 billion and installed Jet's founder, Marc Lore, to run its e-commerce business. Earlier this month, Wal-Mart announced it had acquired Bonobos, an upscale men's retailer, for $310 million. Bonobos, along with Modcloth, a specialty women's apparel brand acquired in March by Wal-Mart, will be overseen by Lore, who will market the clothing lines on Jet.com and the companies' own websites.

In his presentation, Jindel repeated his warning that Amazon will decimate traditional retailing unless retailers can muster adequate responses to the Seattle-based giant's encroachment. Jindel urged traditional retailers to leverage their large physical store footprints to grow their "store-to-door" models. Citing his company's data showing that Framingham, Mass.-based office superstore Staples Inc. has 1,255 stores, Cincinnati-based retailer Macy's Inc. has 823, and Wayne, N.J.-based toy retailer Toys "R" Us Inc. has 875, Jindel said that repositioning the locations as fulfillment centers will enable the retailers to provide next-day deliveries at a competitive cost, improve their product visibility processes, and handle returns more efficiently.

In a separate session, Steve Howard, president and CEO of Hialeah, Fla.-based Esquire Logistics Inc., a long-time last-mile delivery and courier company, urged retailers to partner up with home delivery companies to offer same-day or next-day services. Most retailers will offer a two- to three-day delivery window for online orders, a time frame that Howard said is no longer acceptable to meet the demands of today's consumers.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

More articles by Mark B. Solomon

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