Whether you’re a massive, brick-and-mortar business or an e-commerce startup, you’re probably stressed about transporting goods efficiently in a post-pandemic world. Delivery hold-ups are just as frustrating for you as your customers, but between supply chain slowdowns and staffing shortages, what can you do?
To adapt, leading retailers like Target, Costco, and American Eagle are taking a bold step: bringing their supply chain operations in-house. This trend toward in-house logistics is rewriting the rules of modern fulfillment.
Why make such a big switch? Promising one-day or even same-day delivery is a huge selling point for today’s consumers. Controlling your supply chain by bringing outsourced parts of your delivery process back under your company’s control is one of the best ways to make these guarantees.
Here’s how modern companies are switching to internal supply chains to beat rising costs and unknown delays.
What is in-house logistics?
In-house logistics refers to the practice of managing your own logistics operations instead of outsourcing to third-party providers. This means your business controls key components like:
Warehousing
Distribution centers
Transportation fleets
Fulfillment processes
Before the pandemic, outsourcing logistics to 3PLs (third-party logistics) was often the more cost-effective option. However, supply chain instability changed that calculation. Today, insourcing offers businesses greater reliability and control—essential for keeping delivery promises like same-day or next-day shipping.
By building or buying their assets, mid-sized businesses can prioritize their business and capitalize on increased consumer interest from reliable, guaranteed deliveries. The long-term payoff of competing with Amazon Prime or Walmart Express Delivery can be well worth it.
How are companies taking operations “in-house”?
Here are some increasingly popular ways other companies are taking their supply chains in-house (source):
1. Building private distribution centers
Abercrombie & Fitch and other companies are building distribution centers in strategic areas near their customers, particularly in the Midwest. This allows them closer access to high-volume markets and cross-country shipping routes.
2. Constructing warehouses and other industrial space
Storage space can be a supply chain bottleneck. By owning their space, businesses ensure greater range and deliverability of their goods. Look no further than Costco. The company has doubled its warehouse space over the last five years to nearly 12 million square feet.
3. Chartering private ships for container shipping
With rising international e-commerce competition competing for container space, brands like The Home Depot have started chartering private ships directly for shipping.
4. Acquiring logistics companies
Businesses benefit twice by acquiring businesses: first by guaranteeing their deliveries, and second by offering their services as a subscription to other companies. Target did this in 2017 when it acquired Shipt, a same-day delivery service, which contracts with businesses like CVS and Big Lots. They’ve expanded beyond delivery to logistics, too.
Not comfortable with insourcing, or don’t have the money to make it happen? American Eagle Outfitters (AE) says that’s not a problem. It’s asking retailers to join its shared logistics network instead.
Just like Target and Costco, AE is busy acquiring businesses specializing in supply chains and delivery. These acquisitions include third-party logistics (3PL) provider, Quiet Logistics and shipping solutions provider, AirTerra. Its grand plan is much larger: the company wants to use its new resources to become a “frenemy network” supply chain platform.
How it works:
Hoping to compete with industry titans like Amazon and Walmart, AE wants to ally with smaller companies to pool resources. This could mean anything from sharing container space on ships to buddying up on delivery routes and warehouse space. By working together, partners can collectively ship fewer packages, capitalize on expanded networks and routes, and save significant amounts of money.
As of mid-2022, AE already had over 50 partner retailers on board.
The pros and cons of in-house logistics:
Pros:
Preferential treatment, guaranteed: Insourcers are guaranteed a spot on ships, on trucks, and in warehouses, because they’re yours. Furthermore, if something goes wrong, you can take direct action to fix it, instead of waiting on your third party to solve the problem.
Cons:
Money, money, money: Outright acquiring logistical assets requires a massive financial investment, and many businesses don’t have the cash or the credit necessary. Don’t underestimate the amount of time that research and construction take, either. It could be years or even decades before your investment starts to pay off.
The pros and cons of network sharing:
Pros:
Lower initial investment: Unlike purchasing an in-house network, you won’t need boatloads of cash up-front to join one. This option might make more financial sense for smaller businesses in the future.
Scaled-up opportunities: By pooling resources, smaller businesses can access opportunities traditionally reserved for larger operations. This includes streamlined delivery to widespread international markets or more flexibility in logistics routing.
Cons:
Helping out the competition: Sharing is great… until it starts helping your rivals, too. Remember, any benefit you gain from supply chain sharing equally helps any competitors in the same partner network. Similarly, unless you’re in AE’s position as the network “owner”, you don’t get to decide who joins.
Getting lost in the crowd: If too many partners join your network, you might start to have the same issues as third-party providers during the pandemic. Assets will start to run low, and your larger, more well-known partners might be prioritized.
Use a 4PL to get all the benefits of in-house and shared networks in one place
Down the line. Insourcing and shared networks could become strong options for brands tired of catering to multinational logistics companies. However, shared networks are a distant goal today and most businesses can’t afford to bring logistics in-house.
However, there is already a solution out there for businesses that want a relatively inexpensive yet flexible logistics network: fourth-party logistics (4PL).
At Wayfindr (formerly CBIP), we’re a 4PL service ready to help you form the quickest, cheapest, and most efficient supply chains for your business.
Here’s how it works:
We forge partnerships and networks with highly-vetted logistics providers in markets all across the globe and connect them to your business. We have everything you need to get past pandemic slow-downs and revolutionize your logistics process without buying.
Full control & transparency – See and manage your logistics without building assets.
Custom-built global networks – Warehousing, distribution, shipping, and last-mile in one integrated system.
Scalability – Easily adapt to new markets without new infrastructure.
Our process is simple: consult with our industry experts, access our network, and access our licensed software. Whether you’re looking for help with e-commerce delivery or full-service logistics, we have the connections, resources, and technology to help.
Contact us to arrange a free consultation. Our experts will reach out to you and start revitalizing your supply chain today.
Nick co-founded Wayfindr to help brands design and build market-leading carbon-neutral D2C logistics. As Director, he brings 15+ years of experience across logistics, marketing, supply chain and retail from Asia Pacific to the world.
We’re here to make things simpler for you – we won’t spam your inbox or blow up your phone. When you enter your information:
(Within 24 hours) A member of the Wayfindr team will read your request and schedule a meeting by email. A more in-depth form will be attached to the email.
We will ask you about your needs and specific logistics requirements.
We will take your information and put together a plan designed for your business.
