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American Eagle Makes Yet Another Supply Chain Play

American Eagle Outfitters (AEO) is leaving no stone unturned when it comes to fortifying its supply chain—and it is banking on new partnerships to empower the growth of its shared logistics network.

The specialty apparel retailer’s recently acquired fulfillment and logistics subsidiary Quiet Platforms, formerly known as Quiet Logistics, is partnering with Pitney Bowes in the latest effort to expedite delivery for consumers.

“As we continue to expand the Quiet Platforms business, we are excited to partner with Pitney Bowes, which will enable faster delivery services and logistics capabilities to get orders into the hands of customers quicker and more efficiently,” said Quiet Platforms president Brent Beabout. “Offering in-network retailers and brands access to our expansive logistics capabilities enables them to focus more closely on what they do best, creating great products and memorable customer experiences.”

Under the agreement, Pitney Bowes will provide carrier services aimed at allowing customers to leverage Quiet Platforms’ shared services model to optimize their supply chains. The company wants to give small and midsized retailers access to shared supply chain assets and relationships across the supply chain, providing services across e-commerce fulfillment, omnichannel fulfillment and reverse logistics among others.

“We at American Eagle are creating a supply chain platform that levels the playing field for everyone,” Shekar Natarajan, chief supply chain officer at American Eagle Outfitters, said in a Sourcing Journal fireside chat earlier this year. “Networks are built analog, but supply chains and commerce have become more digital. We’re basically trying to put the two together.”

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This shared supply chain network includes in-market fulfillment centers in Boston, Chicago, Los Angeles, Dallas, St. Louis and Jacksonville, Fla., so that inventory is strategically positioned closer to end consumers, while partner brands can access more cost-efficient supply chains without needing to invest additional capital or resources. With the network in place, Quiet Platforms can offer two-day, next-day and same-day deliveries.

Quiet Platforms already works with Kohl’s, Steve Madden and Peloton to help these companies optimize their inventory and access digital capabilities such as track-and-trace to improve efficiency and margins. Fanatics and Saks Off Fifth have also recently entered partnerships with Quiet Platforms. Sourcing giant Li & Fung is also a partner.

What Quiet believes sets its platform apart is its interoperability. Any retailer in the network can share resources and assets, be it warehouses, trucks or back-end technology.

Natarajan furthered the conversation with Sourcing Journal founder and president Edward Hertzman in a byline on Fast Company earlier this month, noting that retailers without the resources of Walmart and Target often don’t have the luxury of logistics capacity.

“If you think about it, companies don’t typically own the factories where their goods are manufactured, or the ships and trucks that move those goods. They may own a distribution center, but they don’t own the labor that runs it,” Natarajan said. “They don’t own DHL, FedEx or UPS. So many retailers have tried to build their own vertically integrated supply chains, but building more assets and buying more resources is not the answer to achieving hyper-scale efficiencies. Sharing is.”

By working with a global shipping, mailing and delivery services provider like Pitney Bowes, which counts more than 90 percent of the Fortune 500 as clients, Quiet Platforms can turn to one of the leading authorities in modern parcel delivery and logistics.

“Pitney Bowes is committed to innovation and we’re excited to work with Quiet Platforms as it builds next-generation supply chain capabilities for retailers and brands,” said Gregg Zegras, president, Pitney Bowes Global Ecommerce. “This partnership, leveraging the recently announced Pitney Bowes Designed Delivery service, will help brands in the Quiet Platforms network continue to enhance the customer experience.”

Earlier this month, Pitney Bowes opened its largest Presort Services operating center in Las Vegas. The 175,000-square-foot facility is the first for the shipping company to process First-Class letters and flats, marketing mail letters, flats and parcels, and bound printed matter all in a single location. This West Coast “Mega Center” will service mail volumes from Arizona, California, Nevada, Utah and the Pacific Northwest.

Out of the gate, Quiet Platforms is already paying financial dividends for American Eagle Outfitters, contributing 3 percentage points of revenue to the retailer.

In an earnings call on Thursday, American Eagle Outfitters chief operating officer Michael Rempell said the retailer has further reduced the number of shipments per order with Quiet Platform, and shipped digital orders faster with a 13 percent reduction in delivery times.

“We believe that edge fulfillment, share distribution and shared logistics is going to be as transformative to retail as the shift to omnichannel was a few years ago,” Rempell said.

During the January fireside chat, Natarajan pointed out that while the industry average is around 1.4 shipments for every order, AEO has cut that number to 1.05.

The company projects that its supply chain business will account for 5 percent to 6 percent of a projected mid-teens revenue growth rate for fiscal year 2022. AEO also expects Quiet Platforms to break even on profitability this year.

Quiet Platforms is one of two acquisitions AEO made last year to bulk up its supply chain strategy, with the other being parcel delivery firm AirTerra. The firm aggregates packages from multiple shippers and delivers them through the company’s transportation network.