The eCommerce logistics industry has been rocked by another major shift, as industry veteran Pitney Bowes announces the shutdown of its Global eCommerce (GEC) unit.
This strategic move, revealed last Thursday, comes as no surprise amid sustained losses and mounting pressure from investors to offload the underperforming division. Pitney Bowes has decided to sell the majority stake in GEC to Hilco Global, which will then proceed to liquidate and wind down the business through Chapter 11 bankruptcy.
For years, GEC had been a popular and well-established provider in the global parcel delivery space, partnering with carriers like the USPS for last-mile delivery.
Overall, the exit of Pitney Bowes from eCommerce logistics represents a significant shift in the competitive landscape. As one of the most established players in this space, their departure will undoubtedly have ripple effects across the industry.
In the following sections, we will explore the potential implications for eCommerce merchants, carriers, and the wider logistics ecosystem. We will examine how this may impact service availability, pricing and competitive dynamics, as well as the opportunities it presents for other players to step up and fill the void left by Pitney Bowes.
Pitney Bowes’ Exit from eCommerce Logistics
Pitney Bowes, the renowned provider of mailing and shipping solutions, has made the difficult decision to exit the highly competitive global eCommerce logistics market. This strategic move comes after years of financial struggles and underperformance within the company’s Global eCommerce (GEC) division.
Investor Pressure Amid Continued Losses
Pitney Bowes’ foray into eCommerce logistics began in 2017 with the $475 million acquisition of Newgistics, a leading player in the space. The goal was to leverage Newgistics’ expertise and infrastructure to build out Pitney Bowes’ own end-to-end fulfillment and delivery capabilities for online retailers.
However, the integration and scaling of the eCommerce logistics business proved far more challenging than anticipated. Pitney Bowes struggled to streamline operations, manage rising costs, and keep pace with the intense competition in the market.
In the most recent quarter, Pitney Bowes’ Global Ecommerce (GEC) revenue grew 7% year over year, driven by higher domestic parcel volumes. However, the unit posted a $31 million loss in adjusted earnings before interest and taxes.
The company has acknowledged that it underestimated the difficulties it would face in the eCommerce logistics market, citing “macroeconomic and industry headwinds” and overcapacity as the key factors behind. The exit also acts as a means to prevent further losses and refocus on more profitable segments, including SendTech and Presort.
Liquidation under Hilco Global
Pitney Bowes’ decision to exit the eCommerce logistics market reflects a months-long board review of the business’ future.
In April 2023, the company announced an agreement to sell a majority stake in the GEC unit to Hilco Global, a leading restructuring and advisory firm. Hilco Global will oversee the orderly wind-down and liquidation of Pitney Bowes’ eCommerce logistics operations through a Chapter 11 bankruptcy process.
Under Hilco’s management, the GEC unit has been renamed DRF Logistics, which will operate briefly to enable customers to transition to other providers.
The exit of the GEC unit is expected to eliminate “substantially all of the losses” associated with the business, wiping out an estimated $136 million in losses for the past year. Additionally, the company has set a companywide cost-savings target of $120 million to $160 million, much of which is expected to be realized in 2024.
Potential Impacts
The news that Pitney Bowes is shutting down its eCommerce logistics division is a significant development in the supply chain landscape. This move will have far-reaching consequences for various stakeholders.
eCommerce Merchants
Pitney Bowes’ eCommerce logistics business served many prominent retail brands, providing critical services like domestic and cross-border parcel delivery, returns, and fulfillment. Notable clients included Abercrombie & Fitch, Shein and Victoria’s Secret.
For many eCommerce merchants, the loss of this trusted logistics provider means they will need to quickly find alternative suppliers for USPS and other carrier services. This transition may prove challenging, as recommended alternatives may not fully replicate the capabilities and service levels that Pitney Bowes had previously offered.
On a positive note, Pitney Bowes is dedicated to “minimize disruptions and maintain the highest level of service during GEC’s transition”, suggesting the company’s priority on a smooth handover for its existing customers.
While the loss of a reliable logistics partner is undoubtedly a setback for affected merchants, this development also highlights the dynamic nature of the eCommerce landscape. Businesses that can quickly adapt and partner with agile carriers are likely to emerge as the eventual leaders in this industry. Technological solutions, such as advanced tracking and seamless integration, may prove crucial in helping eCommerce merchants navigate this transition.
Vendors & Suppliers
The Chapter 11 bankruptcy provides an important safeguard for Pitney Bowes. The automatic stay prevents creditors from taking immediate action, giving an administrator time to fairly distribute the division’s remaining assets to suppliers and other creditors. This also means suppliers cannot prematurely sue Pitney Bowes to wind down the business.
Furthermore, Pitney Bowes is providing a $45 million loan to the eCommerce division. This suggests the company is committed to ensuring vendors and employees are taken care of, in order to safeguard Pitney Bowes’ reputation and ability to continue operating in the industry despite the negative news surrounding the division’s shutdown.
While the bankruptcy process offers some safeguards, vendors affected by the Pitney Bowes shutdown will still need to quickly identify alternative revenue sources to replace the lost business. Disruptions to their existing revenue streams will require them to adapt and diversify their customer base to mitigate the impact.
Employees
With the company continuing to downsize, it is no guarantee that those employees in the GEC division can keep their jobs, given Pitney Bowes’ decision to continue the cost-savings initiatives for the rest of 2024.
Industry-wide
On the surface, the sudden loss of their services leads to capacity constraints and disruptions, as other companies struggle to absorb the volume of shipments and returns previously handled by Pitney Bowes.
However, the exit of a major competitor may also pose several other impacts. The void left by Pitney Bowes’ GEC division will intensify competition among existing players as they eye to capture a larger share of the market. Smaller, agile logistics startups see this as an opportunity to gain a foothold and challenge the more dominant providers.
Adding to the already competitive landscape, the recent USPS rate hikes driven by operational streamlining initiatives place additional strain on eCommerce companies and shippers with thin margins.
The competitive landscape will likely shift, as companies adjust their pricing strategies and focus on enhancing value-added services to differentiate themselves and attract eCommerce merchants.
This dynamic highlights the interconnected nature of the logistics industry. The ripple effects of Pitney Bowes’ exit will likely be felt throughout the entire supply chain, testing the agility and adaptability of other players in the ecosystem.
Recommended Actions for eCommerce Merchants
The news of Pitney Bowes’ decision to shut down its Global eCommerce (GEC) unit has elicited a mixed response across the eCommerce logistics industry. Many players and merchants have expressed regret and concern over the exit of this long-standing industry veteran.
However, the market is already in a state of flux, with competitors quickly moving to capitalize on the void left by Pitney Bowes. Sensing an opportunity to gain market share and expand their service offerings, various logistics providers are stepping up to accommodate the eCommerce businesses affected by the GEC shutdown.
In TrackingMore’s view, we suggest on the following actions to navigate this situation:
Diversify Carrier Partnerships
The bankruptcy of Pitney Bowes’ GEC unit and ongoing changes at the USPS underscore the need for shippers to reduce their reliance on any single provider. TrackingMore recommends that shippers explore and establish relationships with a wide range of carrier partners, including emerging solutions like ourselves.
To aid in this search, we have previously provided a comprehensive comparison of the top eCommerce fulfillment companies – A valuable resource to help you identify the optimal partner to seamlessly continue order fulfillment operations.
Supercharge Growth with Data-Driven Insights
As the parcel delivery landscape continues to evolve, shippers may consider leveraging data and market intelligence to navigate these changes effectively. You can think about using tracking solutions that can give you full visibility into your carrier performance and easy-to-digest analytics.
TrackingMore’s Role in Navigating the Transition
As the eCommerce industry grapples with the news of Pitney Bowes’ decision to shut down its Global eCommerce (GEC) unit, TrackingMore stands ready to assist the affected merchants and logistics providers in navigating this transitional period. TrackingMore has been specialized in shipment tracking for 10 years, trusted by over 10K enterprises worldwide, including industry leaders such as Shein and DJI. We can help you quickly find the best logistics solution to ensure your orders are delivered smoothly.
Here are three reasons why we believe TrackingMore can be an excellent solution for you:
Robust Carrier Mix and Fast Implementation
When looking for a replacement option, merchants require a wide range of carrier options and seamless integration capabilities. We support over 1200 carriers, which include most of the common carrier providers such as USPS, UPS, FedEx, DHL, and more, hence matching most of Pitney Bowes’ existing capabilities.
This extensive carrier network means that when considering adding new carrier partners, you can avoid the need to integrate a large number of individual tracking APIs. This improves the efficiency of the integration process, as you do not have to devote resources to connecting with every new carrier.
Our comprehensive suite of tracking APIs ensures a fast and efficient migration process, with the ability to integrate your systems in just 1-7 days. Additionally, we offer flexible pricing tailored to your specific growth trajectory, ensuring cost-effectiveness.
Client-Centric Approach to Meet Your Needs
At TrackingMore, we are committed to becoming a trustworthy shipment tracking service provider, prioritizing your business needs and the security of your data. Our solutions are compliant with ISO27001 and other major security standards, ensuring the stability of your shipment tracking services and the security of your data during this turbulent time. .
Additionally, we also support eCommerce merchants by providing:
- Branded tracking page for end-to-end shipment visibility, giving your customers the necessary peace of mind
- Proactive email notifications to notify customers at different shipment milestones
- Detailed analytics and reporting to monitor carrier performances
Dedicated Team to Streamline Your Transition
TrackingMore’s professional team is dedicated to providing comprehensive solutions and support to help you navigate this transition period. Our 24/7 support team and technical specialists are here for you, from testing your migration to providing hands-on guidance in effectively using and integrating our API solutions.
Final Words
The news of Pitney Bowes’ walk-away from global eCommerce has created a sense of uncertainty in the industry, but also a spirit of cautious optimism. Stakeholders recognize the challenges, but see this transition as an opportunity to reshape the competitive landscape and better serve the evolving eCommerce sector.
As merchants and logistics providers explore alternatives, TrackingMore emerges as a reliable partner to navigate this transitional period. With over 1,200 carrier integrations, exceptional tracking solutions for online retailers and marketplaces, and a dedicated 24×7 support team, TrackingMore can help you maintain uninterrupted services and optimize your logistics.
To learn more about how TrackingMore can support your evolving needs, we encourage you to reach out to our experts. We are ready to provide a personalized consultation, discuss our comprehensive solutions, and help you smoothly transition to a logistics partner that can keep pace with the industry’s changes.
The TrackingMore team shares insights on logistics tracking technology, industry trends, and e-commerce logistics solutions to help businesses streamline shipment tracking and enhance customer post-purchase experience.
