Walmart Makes Some Changes to Delivery Date Requirements
After tightening requirements on vendors for on-time shipments and fill rates in 2017, Walmart recently made some changes to its policies.
The world's largest retailer will now let shipments of food, household goods and health and beauty products arrive at regional distribution centers one day early, according to a memo from chief merchandising officer Steve Bratspies obtained by Bloomberg News. Under rules instituted just last year, deliveries that came the day before the shipping window had been subject to chargebacks.
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| REI will require all brands sold at its stores to comply with the standards by 2020, and has been working with its vendors on the development and implementation of them for the past two years. |
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Walmart says the changes are to simplify delivery requirements for suppliers who handle both food and slower-moving general merchandise. The new rules had narrowed the on-time window for food and consumables like baby products and pet supplies to one day, compared with two days for general merchandise. Suppliers of food and sundries now have a "1-day early option," according to the memo.
"We're simply allowing the carrier to deliver a day earlier," Bratspies said in the memo.
However, the change also comes amid very tight transportation market, and some experts think the move also gives Walmart vendors and its own supplier pick-up program more flexibility to secure freight capacity to move the merchandise to Walmart DCs.
Looking at Amazon's Q1 Results
Amazon had its strongest quarterly results in its history, as announced in its recent Q1 2018 earnings release.
Revenue was up amazing 43% to $51.0 billion in the first quarter, compared with $35.7 billion in first quarter 2017.
Operating income increased 92% to $1.9 billion in the first quarter, while net income was $1.6 billion, compared with net income of $724 million in first quarter 2017, in what was by far its most profitable quarter. That net income represented about 3.7% of sales.
However, it was really Amazon's web services unit that really drive the results, with revenue up 49% to $5.4 billion. Sales through Amazon's third party marketplace offerings were up 39%. Meanwhile, Amazon's direct on-line revenues were up a more modest 18%, and just 13% when excluding the impact of foreign exchange rates. That is perhaps even below overall ecommerce growth when the Q1 numbers come out from the Commerce Department in coming weeks. Quarterly US ecommerce growth has been averaging about 15% year-over-year for many years.
Amazon physical stores, which includes its acquired Whole Foods units, came in at $4.2 billion in revenue. Prior year comparisons were not provided.
Of the total operating income of $1.9 billion, $1.4 billion came from the AWS web services unit. Amazon's international unit had negative operating profits of $622 million.
While Amazon reported its Q1 shipping expense – about $6 billion, up 38% - it no longer is providing its shipping revenue (Prime membership + any customer paid shipping) so its net shipping costs can no longer be calculated.
Now China Facing Apparel Manufacturing Woes
China and its entry into the World Trade Organization was a key factor in the havoc raised on US apparel manufacturers over the last three decades. Now, China itself is facing similar industry woes.
China's textile and apparel makers are going through a painful industrial restructuring.
While the country is still the world's largest clothing exporter with enormous production capacity, over supply at home, high labor costs, and rising global protectionism have all eroded its competitiveness.
Labor costs in China have been rising steadily. The minimum wage in the southern boomtown of Shenzhen is now about $336 per month – more than double the rate in some Southeast Asian countries.
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China's market share by value in the global textile and clothing industry fell from 38.6% in 2015 to 35.8% in 2016, with a downward trend in major apparel importing regions such as the US, European Union and Japan.
Since 2014, exports of Chinese textiles and clothing have declined sharply, from about $236 billion in 2014 to $206 billion in 2016, according to the World Trade Organization.
A survey of 34 executives from leading US fashion companies last year found that, for the first time, fewer US brands were looking to China for products, even though the country remains the top sourcing destination for the industry worldwide.
"US fashion companies are not ‘putting all their eggs in one basket', and the most common sourcing model is shifting from ‘China plus many' to 'China plus Vietnam plus many,'" according to the US Fashion Industry Association, which conducted the survey.
For many US brands, a third of their products now come from China, a third from Vietnam, and the rest is from other countries, the survey found.
REI to Enforce Sustainability Standards for Vendors
In early April, outdoor retailer REI released product sustainability standards for the more than 1,000 vendor brands that the company sells. The standards consist of "baseline expectations," which are required by all brands, and "preferred attributes," which are meant to help advance sustainability efforts.
Some requirements take effect immediately, such as establishing a manufacturing code of conduct for supply chains, but others may take years.
REI will require all brands sold at its stores to comply with the standards by 2020, and has been working with its vendors on the development and implementation of them for the past two years, according to the company.
The REI Product Sustainability Standards are open to any retailer that wishes to use them, REI says, and environmentally-conscious shoppers of the co-op will now also be able to shop by "sustainability attribute," such as organic or fair trade products.
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