One of the world’s largest players in the logistics space is out to help some of retail’s smallest brands.
Geodis, the French company that helps other businesses with everything from supply chain optimization to contract logistics and distribution, continues to expand its eLogistics fulfillment service for small- and medium-sized businesses with its latest fulfillment hub opened in Nashville May 2.
The Tennessee fulfillment center, totaling 66,245 square feet, joins existing eLogistics hubs in Indiana, California and New Jersey. The idea with the service, which launched in the U.S. last August, is to help online retailers that lack the volume or scale to still be competitive with larger competitors via services such as two-day shipping, which is possible for 91 percent of the U.S. mainland from eLogistics hubs. Brands are also able to store inventory, paying on a per cubic inch basis and don’t have to sign a contract or meet minimums.
“E-commerce has really blown up, but the segment of e-commerce brands that are these start-ups, emerging brands, that segment is growing. We can probably thank a lot of the social media advertising or the ability to really target their customers in a meaningful way,” said Matt Barr, senior director of product strategy for eLogistics. “So, we’ve put together a really strong solution that enables them to grow into scale, whether that’s going from one facility to two, whether that’s just needing more space or some parts of the space in a facility some parts of the year.”
Unlike many of the digital logistics, freight forwarder and other companies looking to upend the industry with their software solutions and visibility platforms, Geodis offers bread-and-butter logistics at a certain scale that oftentimes can only be cultivated with age.
The company was founded in 1904 as a rail cargo transport provider. It’s now one of the world’s largest third-party logistics companies, with revenue last year totaling $11.6 billion, based on current exchange rates. The company globally has more than 46,000 workers, more than 15,000 of those people in the U.S. Its customer base is made up of mostly enterprise companies across retail, consumer goods, automotive, healthcare, technology and aerospace and defense.
However, e-commerce’s transformative impact on retail drove the push to make Geodis’services make sense for the smaller companies that have proliferated in the digital age. The hope and the pitch to these companies is that Geodis has the infrastructure to grow with them.
“We’re very scalable, so not only in locations but supply chain needs,” Barr said. “If, at some point, a D-to-C apparel brand catches fire or gets a PO from Walmart where they have to go into 42 Walmart facilities, we have the flexibility and scalability within Geodis to support that.”
In a highly competitive market where competition is fierce and billions of dollars are being pumped into supply chain technology companies, Geodis sees its competitive advantage in its heritage.
“I think some of the competition, they’ve been in the software business for four to five years and want to start a fulfillment company. So, they just don’t have the experience and the expertise that we do, and we can scale with the customer. We want them to be successful. We want to protect their brand,” said Eric Douglas, executive vice president of engineering and technology for Geodis in the Americas.
Still, the conversation around technology implementation is unavoidable, and Geodis is making a number of plays in its warehouses to stay digitally competitive.
“We’ve made significant investments in technology to allow new variations that come with e-commerce demand to be absorbed with the technology, meaning we’re less dependent on labor in a very tough labor market to hit the peaks and valleys of a brand’s demand profile, particularly when we get to peak season,” pointed out Matt Street, vice president and general manager of Geodis eLogistics, Geodis Americas. “We can utilize the labor on things like customization and personalization that come with some of the needs of these start-up brands and be able to handle these demands by scaling robotics and other technology.”
Geodis uses the Shyft app, which lets employees swap shifts and also allows for a more flexible workforce where hours can be picked up by workers based on what best fits their personal schedules. That’s something that’s been deployed across its business, not just eLogistics fulfillment centers, and has been used for the past two-and-a-half years.
Robotics have also helped with flexibility on the labor side, by adapting to different languages. The Locus Robotics’ LocusBots used in the company’s eLogistics fulfillment centers, among other facilities, is able to identify the native language of an approaching employee based on an RFID tag. So, someone speaking Burmese or Spanish will be communicated to in the appropriate language. The technology allows the company to work with a more diverse workforce and also streamlines the training process.
For now, all four eLogistics facilities are co-located with existing company facilities, which allows Geodis to pull from existing labor and other resources. That’s not to say future eLogistics facilities couldn’t be standalone buildouts, but in a tight industrial real estate market domestically, capitalizing on existing space helps.
Demand is high for warehouse and fulfillment centers, especially as more companies seek out real estate that puts them closer to the end user for last mile fulfillment. While microfulfillment centers have been talked about in conversations related to delivery speeds, the question of what stock-keeping units make the most sense in each box and where to place those centers remain.
“What I found with microfulfillment is that it addresses limited demands with limited product types, so it’s very much still a niche,” Barr said. “I think there’s more success with that around food and beverage and CPG and so it’s not a solution for everyone. The cost of that real estate is high, you can only have a very limited number of SKUs within these smaller facilities. So, when you think about any number of SKUs that any apparel company has to have by color, by size, even if they carry only a few products, that SKU buildout can be very expensive.”
With e-commerce only expected to grow, eLogistics would appear to have a long runway ahead for its own expansion.
As for where Geodis is plotting its next real estate moves for eLogistics, they’re keeping it close to the vest, with Douglas declining to get into specifics, citing competitive reasons: “We’ll see where that journey takes us. We’re going to be opportunistic. There’s other markets that we’d like to grow to.”