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Supply Chain by the Numbers

- July 13, 2023


Supply Chain by the Numbers for July 13, 2023


India to Overtake US Economy.... in a While; Levi's On-Line Sales Grow, though Brick and Mortar Decline; UPS Drivers Hoping for Big Pay Day; Retailers Getting Tougher on Free Shipping



That is the year that India’s economy will surpass the US to become the world’s second largest. That according to a new forecast by Goldman Sachs Research released this week. The report also projects that China will moved past the US to become the world's largest economy sometime in the 2030s. Key to India’s rapid economic rise: the nation's population – which recently became the world's largest at 1.4 billion – because it has one of the best ratios between its population of working-age people versus its non-working or dependent population such as children and the elderly. India is currently the fifth-largest economy in the world with a GDP of $3.73 trillion, according to the International Monetary Fund. That's behind No. 4 Germany at $4.3 trillion, No. 3 Japan at $4.4 trillion, No. 2 China at $19.37 and No. 1 America at $26.85 trillion.



That is the average minimum on-line order amount needed to receive free shipping, according to an analysis recently conducted by retail technology firm Navar. That is modestly more than the $52.00 average seen in 2019, but some see other signs retailers are pushing back against profit-draining free delivery. Macy’s, Sak’s, Neiman Marcus and Abercrombie & Fitch are among retailers recently increasing order minimums, according to the Wall Street Journal. And while Amazon, the retailer that started this madness, still offers fast and cheap shipping for its Amazon Prime members, the annual fee rose to $139 in 2023 from $219 last year. One recent study by Deutsche Bank found home delivery costs are 10-15% of an on-line retailers sales, versus 2-3% for brick and mortar retailers. But asking consumers to take on more of the cost could be a factor in the big slowdown in US ecommerce sales starting in 2022.





That was the rise in Q2 in iconic jeans maker Levi’s direct-to-consumer (DTC) revenue – versus a 22% decline in wholesale (shipments to retailers) sales. So let’s not count out recently slowing ecommerce sales quite yet. But with slowing wholesale revenues, total inventories rose 18% on a dollar basis and 8% on a unit basis year-over-year. The decline in sales to retailers was especially hit by a reduction in spend by lower income consumers, Levi’s. “Clearly the lower- or moderate-income consumer is being squeezed, and that is driving some of the big category dynamics,” said Chip Bergh, Levi’s CEO.




That’s about what a full-time UPS driver now makes annually, before any overtime, as UPS and the Teamsters union have hit a stall in negotiations for a new contract over wages, said several reports in the last two weeks. But before the current impasse starting on July 5, UPS agreed to two important concessions: an end of a two-tier wage system that the union says short changes part-time drivers who also do warehouse work; and outfitting its delivery trucks with air conditioning for the first time. This is leading the union to believe it is in a position of strength. With some significant rise in pay likely to be part of a final agreement, whether after a strike or not, labor supporters see what may look like success at UPS to change the tide relative to organizing Amazon fulfillment center workers after years of failure to do so.

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