I spent the beginning of this week in Orlando, attending the JDA Focus conference. This is one of the busy times in the life of an analyst, as we head into conference season. And for me, conference season means lots of trips to Florida. In fact, my travel earlier this week was the first of three consecutive trips to Florida. Next week, I will be speaking on a panel on warehouse and fulfillment automation at the Pitney Bowes Retail (R)Evolution conference in Orlando. The following week I will be attending the Manhattan Associates Momentum User conference in West Hollywood. These are all opportunities to learn from my peers and see a lot of innovative stuff in the supply chain space. They are also an opportunity to accumulate JetBlue points. I look at that as a win-win situation. And now, on to this week’s logistics news.
- Walmart agrees to a $16 billion deal to buy a majority stake in India’s Flipkart
- Alibaba launches blockchain technology
- JD.com founder envisions “100%” robot workforce
- Sprouts drops Amazon Prime, chooses Instacart for home delivery
- Elon Musk touts 600-mile range, clean energy for electric semi
- Amazon building $1.5B global hub at Cincinnati-area airport
While there has been a lot of talk about the potential acquisition, and even a last-ditch effort by Amazon to jump into the mix, Walmart has agreed to a deal to buy a majority stake in Indian e-commerce giant Flipkart for $16 billion. The majority stake will be roughly 77 percent, with the remaining 23 percent remaining held by current investors. Walmart sees huge growth in India’s e-commerce market in the foreseeable future, and aims to transition Flipkart into a publicly listed subsidiary. The deal with Flipkart puts Walmart in a position to take on Amazon in India, where Amazon has announced plans to invest $3 billion in the country. A final close to the deal is expected to take place later this year.
Alibaba is the latest company to jump on the blockchain bandwagon. The company has launched an initiative to protect product authenticity and improve its “supply chain integrity.” The Food Trust Framework is a Tmall Global initiative, with a goal of creating transparency for cross-border trade across Alibaba’s Tmall Global platform. The initiative will include product tagging with unique QR codes and blockchain technology to authenticate, verify, record, and provide reporting of products throughout the shipping process. The initiative has launched a trial program with Australian vitamin brand Blackmores and New Zealand dairy brand Fonterra.
JD.com’s founder, CEO, and Chairman Richard Liu has been vocal about his belief in using technology to advance his business. The company has implemented blockchain technology into their supply chain, built an unmanned sorting center, trialed robotic deliveries, and invested heavily in drones, some of which are capable of delivering huge payloads. The company is investing $4.5 billion to build an artificial intelligence center in Guandong province, and has set up its JD-X robotics research hub in Silicon Valley. In a recent interview, Liu said he sees humans being removed from the entire retail process. “I hope my company would be 100% automation someday … no human beings anymore, 100% operated by AI and robots.” This will include the order picking, packing, and delivery via drone or autonomous vehicle.
Sprouts Farmers Markets, a chain of nearly 300 stores based in Phoenix, announced that it has cut ties with Amazon Prime for home delivery. Instead, the company will now partner with Instacart to make home deliveries. Sprouts is now offering the service in its major markets across major markets across Arizona, California, Colorado, Kansas, Missouri, Nevada, New Mexico, Oklahoma, Texas, and Utah, and plans to expand the service throughout the year. The move is not surprising given Amazon’s launch of free grocery delivery to its Prime customers.
When Tesla first unveiled its electric semi-truck last year, CEO Elon Musk indicated that the base price of the 300-mile range Tesla Semi is $150,000, and the 500-mile range model costs $180,000. On a quarterly call this week, Musk indicated that the production version will likely have a range of 600 miles. Musk also indicated that the company could use its clean energy division as a selling point. Tesla is interested in selling to its semi-truck customers charging at a fixed low rate produced by clean energy, potentially made by solar-powered chargers. The big question many in the industry have is whether the truck will be able to carry a full payload 600 miles on a single charge. While Musk is confident in the technology, the proof will come when the trucks are in full service. Until then, we will have to wait and see. The company currently has about 2,000 reservations for its trucks.
Amazon has been proactive in setting itself up as a global logistics provider. It has also taken more control over deliveries, with its private fleets of vehicles and the launch of Prime Air. Now the company is moving forward with plans to build a $1.5 billion international Prime Air hub at Cincinnati/Northern Kentucky International Airport. The complex will include more than 3 million square feet of new building construction, will serve Amazon Prime customers, and will host a fleet of more than 100 Prime Air cargo planes. Until the new facility is ready, Amazon will lease space from DHL, which also operates a hub at Cincinnati/Northern Kentucky International Airport.
That’s all for this week. Enjoy the weekend, and the song of the week, Willie Nelson’s On the Road Again.