XPO launches shared-space model for retail distribution

Transportation and logistics provider XPO Logistics Inc. said today it has launched a shared-space distribution model that opens its technology, trucks, and workforce to omnichannel retail and e-commerce customers.

The company's "XPO Direct" service can position goods within two days' delivery of 95 percent of the U.S. population and in close proximity to retail stores for inventory replenishment, the Greenwich, Conn.-based firm said.

Retailers will gain access to XPO warehouses and last-mile hubs at more than 100 locations, the company said. Bradley S. Jacobs, XPO's chairman and CEO, said the program could provide brick-and-mortar retailers with a cost-effective way of handling omnichannel fulfillment by allowing them to manage orders without the expense of doing it in their stores or investing in their own facilities.

"In essence, we're renting out our scale and disrupting traditional thinking about the capital-intensive, regional distribution model," Jacobs said in a statement.

XPO will use its technology to identify patterns in consumer behavior and seasonality, predict when and where to place products by SKU number, and reflow goods to other sites as needed, XPO Chief Information Officer Mario Harik said in the statement.

The service could help large retailers reduce the need to perform omnichannel fulfillment from brick and mortar stores, where messy shelves and untrained employees add cost to the operation, John Haber, the founder & CEO of consultancy Spend Management Experts, said in a phone interview. If a retailer could use forward-stocking locations provided through XPO, they could cut some of those high costs, he said.

"XPO is better at arranging fulfillment than the people who are doing that omnichannel work in the brick and mortar store," Haber said.

XPO could also help retailers manage shipping complexities such as calculating dimensional weight and choosing the best last-mile carrier for a particular size of parcel, he said. Large retailers such as Amazon.com Inc., WalMart Inc., and Target Corp. have their own logistics capabilities to handle such complexities. However, most retailers without the scale and resources can't do it themselves and could benefit from partnering with XPO, Haber said.

Smaller e-commerce companies in particular would gain the most from XPO's offering, Tony Wayda, supply chain practice senior director and principal at Boulder, Colo.-based consulting firm SCApath LLC, said in an email. By helping them solve the classic issue of getting the right product in the right place, XPO could find an eager market of omnichannel retailers and e-commerce providers, he said.