American Eagle Outfitters and Office Depot have begun to shut down their logistics businesses geared to serving outside customers, raising doubts about the viability of the supply chain-as-a-service business model for retailers as businesses scramble to find new fulfillment partners.
Lifestyle and apparel company American Eagle Outfitters (NYSE: AEO) is winding down its Quiet Logistics subsidiary, which provides omni-channel fulfillment services to retail brands, FreightWaves has learned. AEO acquired Quiet Logistics for $360 million in 2021 shortly after acquiring delivery startup AirTerra. After achieving reduced delivery times and excess store inventories, AEO extended its in-house logistics capabilities to other businesses looking to better compete with Amazon, Target and Walmart.
“American Eagle Outfitters, Inc. has made the decision to close its wholly-owned Quiet Logistics business and discontinue services for third-party customers over the next several months. This strategic decision will enable AEO to prioritize growth and focus on its portfolio of leading lifestyle brands,” the company confirmed in a statement to FreightWaves. “Quiet has valued its partnerships with its customers and, where we are able, are assisting customers to identify and transition to new providers. We appreciate the contributions of our associates, and we are committed to doing what we can to support them as well.”
AEO customers and other business partners began sharing unsubstantiated news about the Quiet Logistics exit over the weekend on social media. Quiet customers include luxury fashion brand Perfect Moment and Baggu, a maker of stylish reusable bags, according to its website.
Picking operation inside a Quiet Logistics facility. (Photo: Quiet Logistics)
AEO finally realized that having a separate multi-client business didn’t work well with its core retail business and own fulfillment requirements, retail and e-commerce industry experts said. A sign of future potential trouble came about one year ago when Quiet Logistics closed a facility in St. Louis. The company currently operates fulfillment centers in Boston, Atlanta, Dallas and Los Angeles, according to its website.
“The market is forcing everyone to pick a lane. AEO is pivoting back to focusing on its own volume,” said Matthew Hertz, founder and CEO of Third Person, a match-maker for e-commerce brands and logistics providers, on LinkedIn. “For a few years, every major retailer thought they could monetize their supply chain by selling it as a service. It sounded great in a pitch deck. In reality? It’s incredibly difficult to serve third-party brands while managing your own retail volume.”
Earlier this month, e-commerce logistics provider Stord acquired rival Shipwire from parent company Ceva Logistics to beef up its capabilities and distribution footprint. Brittin Ladd, a supply chain and e-commerce logistics consultant who spent three years at Amazon, said on LinkedIn that AEO tried to find a buyer for Quiet Logistics, but there was no interest.
Meanwhile, Veyer, the logistics spinoff of The Office Depot Corp. is ending its fulfillment operation for standalone logistics customers following last month’s $1 billion acquisition of Office Depot by Atlas Holdings, according to a message from Veyer’s business development team to a consulting agency that was viewed by FreightWaves.
“As part of the broader strategy work happening with Atlas’ acquisition of Veyer’s parent company, Veyer will be exiting the e-commerce fulfillment business. Because of that shift, the partnership program is being wound down and we won’t be able to move forward with any further collaboration,” the Veyer manager said. Many employees will lose their jobs because of the restructuring.
Veyer has 8 million square feet of warehouse space in 40 facilities nationwide.
ODP Corp. is folding Veyer into its Business Solutions subsidiary, which sells office supplies and other products in bulk to businesses, and is not shutting Veyer down, the company said in a statement provided to FreightWaves. “ODP customers were informed upon completion of the acquisition that, to prioritize efficiency, speed, and execution for its customers in this new chapter, the company would be realigned to focus on its two core businesses, ODP Business Solutions and Office Depot OfficeMax. As a result, Veyer is being integrated into ODP Business Solutions, where its logistics, distribution, and transportation capabilities most naturally support commercial customers and future growth.”
Management hinted in a news release announcing the deal that Veyer would be disbanded and stop providing logistics services to outside businesses.
“Today marks the start of an exciting new chapter for ODP as a private and infinitely more agile business. As my new coworkers and I begin this next phase together, we are refocusing on our two core businesses, Office Depot OfficeMax and ODP Business Solutions. With a refreshed strategy, commitment to our customers and Atlas behind us as our long-term partner, we’ll bring renewed focus and discipline to how we operate, support our people and drive sustainable, profitable growth on both sides of the business,” said new ODP Chief Executive Craig Gunckel.”
Chris Mortl, a senior account executive at Office Depot, confirmed on LinkedIn that rumors about Veyer’s closing were accurate, adding that he was willing to provide referrals to Veyer employees applying for new jobs.
