Leaders in Value Chain

#73: Brittain Ladd Global Ecommerce Expert

March 04, 2020 Alcott Global Season 1 Episode 73
Leaders in Value Chain
#73: Brittain Ladd Global Ecommerce Expert
Show Notes Transcript

Brittain Ladd has worked with Amazon for Worldwide E-Commerce and Cross Border Expansion, Amazon Fresh and Pantry Operations, and as a consultant with Deloitte and Capgemini as well as a few other global MNCs in their supply chain BUs.

Discover more details here.

Some of the highlights of the episode:

  • How the e-commerce industry grows amidst the Coronavirus crisis
  • Why Google should buy Shopify and FedEx to compete with Amazon
  • Death of retail?
  • Amazon will take 12% to 20% of the global 3PL market.
  • Amazon will be the biggest grocer seller by 2025 to 2028

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Radu Palamariu:   0:00
Hello and welcome to the leaders in supply chain podcast. I am your host, Rod a problem? Are you a managing director of Elka Global? And it is my pleasure to have with us today. Britain Britain has worked with Amazon for worldwide e commerce and cross border extension, amazonfresh and pantry operations, as well as a consultant with Deloitte and Hip, Jim and I on a few other global eminences in their supply chain is his unit. He has hands on experience in working and living in China, Saudi Arabia and Europe, and has spent pretty much it's old career, implementing best in class supply chains for leading retail, consumer and fmcc companies globally. His great concept for online grocery retailing was recognized in 2015 as being that 100 idea in business. And as a former Marine, he believes that anything can be achieved regardless of the signs of the challenge. He's also a constant writer, Arlington and pens a monthly column for several publications, including The New York Times, The Wall Street Journal, Financial Times and numerous international publications. Britain. Thanks for making the time and great to have you with us today.

Brittain Ladd:   1:05
Oh, it's my pleasure. Thank you so much for inviting me.

Radu Palamariu:   1:09
Let's start first with with your specialty. So you you say about yourself that you are very much focused on bringing products to market, reimagining retail and business practicing and also leveraging supply chain and logistics to be enabled growth. Tell us a little bit about specifically about the reimagining retail practices piece and the space of innovation, because I think a lot of people want toe, you know, want to and are curious about it.

Brittain Ladd:   1:37
Sure well, though, the best example I think I can give is when I was with Amazon and I saw that Amazon had amazonfresh and Amazon was online, I really looked at that is that was actually limiting Amazon, and my argument was, Amazon really needed to have a physical retail presence. Amazon should make an acquisition of a retailer, and in 2013 I actually wrote a research paper called a Beautiful Way to Save Woolworth's, where I recommend it to Amazon to acquire Whole Foods, and I designed a store for Amazon that includes micro fulfillment, the removing of center store I'll items putting those in the ceiling and in the back room and using micro fulfillment to fulfill those orders and giving Amazon the ability to fulfill an online order and deliver it in 15 minutes. The 30 minutes around the radius of the new store that there that they could build and Amazons credit. They're actually building that store. So when I talk about reimagining, I'm talking about looking at a company like Amazon and saying, Is this really the best they can do? Um today, for example, I wrote a post on lengthen about Wal Mart. My argument is, in 2015 I actually spoke to executives from Walmart and I said to them, Do not acquire jet dot com. I said, I think you'd be much better off acquiring Shopify, and I think you should acquire Shopify before their I P. O. And I actually thought Wal Mart was going to do that, but I was wrong. That did not take place. So Walmart acquired jet dot com. They basically have implemented jet dot com, But has it really made Wal Mart better? And my argument is I still believe Wal Mart should acquire Shopify, and I think the best way for Wal Mart to do that would be to divest Sam's Club, acquire Shopify and then acquire FedEx with it, and you stock swaps and use 40 year bonds and the proceeds from the sale of divesting Sam's Club. It actually make that a reality. So that's what I talk about reimagining looking at these massive companies and saying, Is this the best they can do? Or through M and A and other things? Can they really re imagine what they're doing?

Radu Palamariu:   4:09
And I will what I will want to ask you to dig deeper into the this topic and you're bringing forward some, um, some wide ranging thought process in terms of how this big man with skin can become editor in and actually look at their businesses in a creative way. But before we do that, I also want to ask you the topic off the day, which is linked to the Corona virus crisis that we are experiencing here in Asia, where I'm sitting, it's ah, definitely impacting everything. It's impacting supply chain impacted logistics. We have provinces in China that under lock down. It also means that e commerce is the hole is growing tremendously as the channel for people to procure goods because you know they don't want to go out. Very simply put, What's your view on this? And and how is this coronavirus crisis impacting things?

Brittain Ladd:   4:58
Well, really, What it's doing is it's completely disrupting supply chains. It's going to start disrupting retail in the U. S. Because a lot of product is not. Trans is being transported from China off places in Asia to the U. S. But really, to me, what this virus does is point out the importance of countries and cities and states and governments doing a much better job of pre positioning food and water and medicine and so forth. So let's look at what the reality is on the ground. People do not want to go out and be around other individuals for fear of catching the virus. So many of them are moving to using e commerce. But e commerce is usedto having you know, 2 to 4% or 5% of the population ordering groceries from them, and so on. So now they are completely overwhelmed. There's no food, no groceries in the store, and e commerce is no no longer a viable concept to utilize. So what this virus is done is point out the importance of supply chain the importance of logistics. But really, what it says to me is these governments need to do a much better job of being prepared and four, deploying inventory of medicine and so forth, because when these types of situations happen, they come out of nowhere with no prior warning. And this really congee get ugly in many different countries, whether it's Singapore or China or some other country. And I really think this is going to have a bigger, disruptive effect than people realize. And the danger is this is this Corona fi risk at the end. Is it going to go dormant and come back? What is this thing really going to do? And I hope that the lesson learned from this is you better be prepared and much better prepared for something like this in the future.

Radu Palamariu:   7:07
Yes, hopefully, hopefully doesn't take too long, but indeed them in this forest I can share from the reality of being here in a in Asia. The moment is it has gotten a lot of people panicked and also it comes on top of the sires epidemic, which happened about 17 years ago or so, which left a lot of people traumatized. So is that there's that fear factor in terms of the population in the supply chain and government stockpiling, and all of that has not exactly been done well. A school is. It could have been. But there are a lot of efforts in the right direction, so hopefully it goes away faster rather than later. Um, also, I wanted to kind of ask you before we deep dive into the big on coming back to the topic of the Amazons, the Wal Marts, and they were emerging retail. Before we go into that, I wanted to ask you some other case studies because there are some other companies apart from this huge ones that have done some pretty good a job around reimagining and reinventing the way they do retail. So we have decathlon is one that my thing has done a very good joke as well. Can you can you share with us? Maybe some case that is, apart from the Amazons and the Alibaba's and the world more that you think have done a pretty good job in this space.

Brittain Ladd:   8:25
You're well, one of my favorite cos I like to discuss is X five retail group. They're based in Moscow, and I'm amazed at how few people have really heard of X five retail group. And the reason why I say that is they are the world's largest grocery retailer by store count around 15,100 stores, all based in Russia. And last year I had the pleasure of spending time with them, providing them some strategy consulting. And after assessing what they're doing and assessing their supply chain and the fact that they have three different formats, one of them being called a torch ca. I think they have done a really great job of their commerce capability, their supply chain, their store, their retail. And what I really like about about them is the fact that they're wanting to push the envelope and really become very innovative. So the project I was working with them on was leveraging autonomous vehicles. Ah, designing an entirely new way to do last mile delivery using mobile store format instead of what we would see in the United States in terms of online grocery replenishment so forth. So I'm really keeping an eye on them they're doing great, but I I expect some really big things from them. The other company that I like is a smaller company called Picnic, and what I like about picnic is there on online grocery retailer. But they have really devised an interesting methodology for online grocery retailing, where they're profitable. They leverage Elektronik vehicles to make deliveries. They're the ones who optimize the routes they picked the time when they're going to be in certain neighborhoods, certain locations to make deliveries. And it's a new format that has really proven very popular with the consumer. And again, it's avoided a lot of the problems that I see in the U. S and parts of England and so forth related the last mile delivery. So I do think Picnic does a great job Decathlon, the world's largest sports sporting goods retailer. They just entered the U. S. They're taking a very, um, very slow approach, a true crawl, walk, run. But globally, I think they've done a fabulous job of branding who they are coming up with, a new way of doing sporting goods and the way I refer to them as they are the all D of sporting goods. So I'm expecting that they'll do well in the U. S. I frankly wouldn't be surprised to see them make an acquisition. Um, And then, of course, you have to talk about Ali Baba. I think you have to talk about Lozada. There are some really, really interesting Cos doing things globally that I think are quite special

Radu Palamariu:   11:22
and in terms of in terms of linking it now to the the the Amazon and the grocery dominance that it seems to be to be starting in a whole big way for them, right? They they have had their acquisition that you mentioned impact in 2000 and 13. Whole Foods is now on thumb. They built Amazonfresh into Amazon prime, and now they're also having their own branded supermarkets. How do you see this playing out in the future? What do you think they'll do next?

Brittain Ladd:   11:53
Well, really, this is the big year for them. And when I had made my recommendation back in 2013 Fram is on to acquire Whole Foods I've written. I wrote in that research paper and several research papers before the actual acquisition of Whole Foods in 2016 or 2017. I should say that Amazon needs to go slow, and Amazon really is not going to have a big impact on grocery till around 2020 2021. So this year, where they unveil their branded supermarkets, That thing that I'm really anticipating is that when Amazon unveils their new supermarkets, I'm pretty convinced, pretty confident. I know what the design is going to be. And I'm convinced that when they unveil that store, the majority of grocery retailers in the United States overnight become obsolete. Because Amazon gains nothing by having supermarkets or grocery stores like the other players, they they gain by being innovative and leading edge. And so I think they're really going to do something unique in their design. And as I stated earlier, I think they're gonna pull the center store. I'll items out of the store, put those in the ceiling and in the back room and use micro fulfillment to fulfill orders. I think you'll see much more focus on fresh food, fresh fruits and vegetables on the first floor of the store, and then, of course there's Whole Foods and Amazon is going to continue expanding whole foods. I will not be surprised if Amazon creates a new format for Whole Foods called Whole Foods Plus, which will give you the best of Whole Foods and Organics Plus give you the ability to have branded CPG product. And then you have amazonfresh. You have Amazon go and you have prime and I really believe in 2020 and 2021 2022. What you're going to see is a lot of experimentation from Amazon. What's the optimal store? What's the optimal integration of our ecosystem for Grocery? What should we do on the front end to really make it easier for customers to order from us? What's the optimal assortment? Where should we be leveraging micro fulfillment and four deployed inventory? Things like that and once they have perfected those things starting around 2023 2024. That's when I think you'll see Amazon really start to accelerate. And I wrote in 2016 and I still stand behind what I wrote back then. I truly believe of Amazon puts the time, money and effort into this between 2027 2030. They'll become larger than Kroger in terms of grocery cells, and between 2030 and 20 to 35. They'll become larger than Wal Mart in terms of grocery sales. So they giving the example of how much room Walmart Amazon has to has to move in this time. Today they're about 2.2% of market share. Kroger is around 9.7% market share, and Wal Mart has 23% market share in groceries. So I believe between 2022 2035 Amazon absolutely has a potential to take over that spot from Walmart, meaning Amazon will go from two per 2.2% market share to around 23 24% market share by 2035. This absolutely is an incredible opportunity for Amazon, and I absolutely think they're going to go after it and win it

Radu Palamariu:   15:42
on. And I wanted to. This popped into my mind the question. I mean, this is pretty much being Ah, all throughout the last couple of years has been a retailing bloodbath. There's a bunch of companies that have closed down much smaller, smaller companies. I think you have J. C. Penney. You have a lot of them struggling big time in the U. S. It's also hearing in Asia you have forever 21. You have a number of them. I mean, I just don't wanna We can come so many of them, Um, because they failed to properly adapt or e commerce. They failed to properly integrate. That strategy is how do you also see this this bloodbath, continuing or not, Or, you know, I mean that obviously, you have a lot off this thing's brands. You also have that. I mean, I wanted to bring into the discussion the fact that Nike and the Ikea right, pulled out of Amazon. They don't want them was onto to be representing them, um or, you know, be owning their their customer experience. How do you see all these things also?

Brittain Ladd:   16:42
Well, so let's talk about the last. The last part of the question first. So certainly Nike and I Kia, they are two very unique Cos Nike has such a powerful brand. They have such great brand recognition. They have such a good supply chain that Nike absolutely doesn't need Amazon. But the thing that doesn't change is that Nike's products will still be sold on Amazon. They'll just be sold by third party sellers. So Nike pulling away from Amazon generated a lot of press. But it's not. I don't believe there's really that many companies that can do that. So I think Nike will do well on its own. I Kia is interesting because I never understood why I Kia on their own hasn't acquired Overstock dot com why they haven't acquired way fair and why they haven't created their own marketplace for furniture globally. And in essence, why hasn't Ekeus said, We're going to become the shop If I, of all things furniture will be a brand, Wayfair will be a brand. The other furniture companies out there will be brands will have their stores on this market place, but all the furniture and the distribution and so forth well, actually put that on our marketplace. So again, I think it makes sense for I ke er to pursue doing that. I don't believe there's a stampede of companies out there that are suddenly going to start announcing We are no longer on amazon dot com. And here's why. Amazon is the hub of online demand generation. And there is this concept that I speak about as a consultant where I say you want to sell anywhere, meaning you want to sell anywhere your customers are. So I believe you have to have a presence on Amazon. I think you absolutely have to have a presence on your own website. You need to be willing to sell your products on Wal Mart doc. Com wish dot com Ali Baba and so for. Sell those products anywhere you can, so I don't see how it's possible for a lot of companies to pull away from Amazon. I just don't Amazon is growing. They are the hub of online demand generation, and I think they're going to remain that way as far as the retail apocalypse. I absolutely believe it's true. I've written multiple articles on this topic, but here's the dirty little secret. It's necessary in the United States, especially cos overbuilt retail, and I've read estimates as high as a no additional 90,000 stores need to close globally, but with many of them in the U. S. In order for there to be a true balance. And what does the consumer need in terms of a retail footprint and unfortunately, boards of directors and I do blame the boards of directors. They have done a terrible job and who they have selected to be the CEO. These CEOs absolutely have ignored what's going on around them. And when we look at a company like Macy's, for example, Macy's was created in 18 58 and yet their new CEO of Jeff Jeanette the other day was saying, We're going to come out with a new retail model tow where we have relevance. Well, you've been in business since 18 58. When are you really going to figure this thing out? And I think Macy's has done a terrible job and who they've appointed A CEO J. C. Penney made a big mistake when they tried to have Ron Johnson come in and totally changed the store and many other retailers there folding up because they could never do anything to show. How are they relevant, either through what they do in the store, their products, they're assortment or frankly, they're digital. So I just absolutely think this is necessary. We've seen this in the past and I think that we're not seeing the death of Rito. We're seeing the reinvention of retail, and I believe what we're going to see coming out of this in the next 1 to 2 years closer to two years is a much more exciting and immersive and interesting retail industry that I think people are going to say, Wow, this is really interesting And as part of that I truly believe the thing that's not being discussed enough is what augmented reality and virtual reality are also going to do in the coming years to retail. Um, so we're really facing some incredibly interesting times for many retailers, but unfortunately, it's Thea the end of times for several big brands out there as well.

Radu Palamariu:   21:39
Mmm. And since since you mentioned it, let's go into that topic off of virtual stores. Artificial virtual reality on DDE that that side of was going to happen in the in the space in the next couple of years, where I think you mentioned that it might even come to a point where setting foot inside the store is no longer necessary because the store doesn't exist. It's a virtual store on DDE that might happen as soon as 2030. Tell us a little bit about your your views on the

Brittain Ladd:   22:13
well one of the things that I'm so grateful for is when I worked for Amazon, we thought big. They're we always discussed big ideas and I was surrounded by some really capable and qualified individuals. But really, what I had access to was Jeff Bezos because he was too CEO. He was constantly messaging us, and he was speaking at different times throughout the company. And Jeff Bezos always said What customers want our speed, They want value, They want low prices. And so why is Amazon doing one day delivery speed? Why are they adding millions of skews on an almost weekly and monthly basis convenience? Why are they going into physical retail convenience, giving the customer things that they want? So when I looked at that and I started to doing research on the topic, I said, Well, what really will be able to increase speed even more? And when I was in Russia, I was able to work, um, with a company called Yandex. I had access to some of their people, but I actually helped a young lady start several virtual reality clubs, and it was while I was experimenting with the headsets that it really came to me that the way you increased speed is that you remove the biggest obstacle and the biggest opticals to speed is the physical network, the limitations of the physical infrastructure. And so I sat down and said, If all I had was virtual reality an augmented reality, and I was going to create a retail ecosystem, what would it look like? Well, when you think of it, from that point of view, you don't say, Well, I'd build stores over here and I build distribution centers over there. What you say is, well, I would create a virtual store toe where a customer sitting in their living room or in their kitchen, in their car, wherever they could put the headset on, or they could look at a TV and just where special glasses that would give them the ability to do this, and they basically would be able to set foot inside a store. But the store's virtual, and the reason for doing that is again. There's no faster way to shop If I don't have to physically get in a car or a new birth and travel and Aiken set foot in a store using a headset and it appears as if I'm actually in the store and I could go down any aisle, and I can pull products from the shelf and look at it and put it in my basket. I can have that shopping experience that I may enjoy, but I'm actually shopping from a store that doesn't exist. The products on the shelf do not exist. I'm simply putting in the basket. I'm completing the transaction. What exist will be a new type of supply chain behind the scenes where inventory is much closer to the customer. Distribution centers will look much different, but it's a much, much more cost effective supply. Jane. It's certainly much more profitable for retailers to do this, because retailers today that have stores they absolutely can experiment with taking the physical stores they have in turning those into distribution centers and micro fulfillment centers as they convert their customers that want to do this. The leveraging autumn augmented reality in virtual reality to shop, and when I went through this exercise and I spoke to retailers in different locations in Russia and in China and in the US, every single one of them said yes, you could take everything I'm doing here. Put into a virtual store. The customer could shop for it and we absolutely could deliver it to them. And we could do all of that at a much cheaper price because we have greatly decreased the amount of infrastructure we need. And I am convinced because Jeff Bezos keeps saying it. Customers want more speed. They want more convenience. Well, you're not going to have magic. Carpets were not going to be having our own personal helicopters, so there's a limit to how fast we can go. A R N v r crushes all the limits. They don't exist in a virtual world. And I truly believe the future of retail by 2030 is there will be many, many consumers who shop from a virtual store,

Radu Palamariu:   26:53
huh? Fascinating. Also wanted to get your views. And you've you've expressed the fuel extremely interesting post sexually on on Googling and on Facebook. I think specifically for Google. You you did share that The fact that they believed by enabling retail they will protect their ad revenue and actually offer an incentive time zone is failure. Wrong assumption. Tell us a little bit. And you also stated the stated one line that really caught my eye when you said that Google is the biggest loser from the fact that Amazon blew out a ll the numbers and and head to London 18 billion in net sales last year. Um, how do you see this? Google versus Amazon? Facebook there, Samson Competition.

Brittain Ladd:   27:39
Well, I I was at Google in early January, and I had this discussion with several executives, and the thing that jumped out at me is, yes, they believe the way for them to protect their ad revenue is to enable retail for others. I struggled to see how that is going to be sustainable because what Google has already done and what I've seen at other companies. When you try and enable retail for others and you try and give the consumer the best experience, what happens is artificial intelligence and machine learning start to identify what is it the customers are looking for? And it starts to direct them to just a few retailers. The retailer with the most assortment the retailer with the best price, the retailer with the most convenience or all three or one of the three or two of the three. And so when I had this discussion with Google, I said at some point there's complete, diminishing returns here where it doesn't make sense for any retailer toe want youto enable them because you're not directing customers, tow their stores. You're directing customers to other stores. And I said, Why don't you instead go big in this space? Why don't you? Was Google go acquire Shopify and go acquire FedEx and you become a retailer plus U N Able others? Or why don't you go acquire Costco and acquire Insta Mart are insta cart? Um, why don't you look at acquiring Target? Be a retailer that has a retail presence, B B. The company that can leverage your technology to make its to simplify retail for others enable retail before your own customers be able to take those massive customers who shop a Costco or target the millions of customers that will be leveraging Shopify. Why not create an ecosystem where they're benefiting of Google being a retailer? Plus, they're benefiting from the fact Google is actually doing some very special things in retail. But it's more than just a Ebeling retail, and I said in addition, why are you not going to Netflix or Disney or going toe Who loo or something like that? And instead of trying to do advertising dollars, you actually start recommending Siri's to them or putting brands into their Siri's. Their limited Siri's their movies so that when the Siri's or the movie ends, it continually is being replayed. So it has a life of its own, and, in essence, you're advertising. But you're not advertising commercials. You're advertising the brand of Google and the fact that Google now won't Shopify and Google now owns FedEx, and that becomes part of a new marketing campaign. But it's a marketing campaign, using TV series and movies and so forth. So it's a different way to generate ad revenue without running commercials. Because those air so easily attack and copied by who Amazon and Amazon absolutely is taking ad revenue from Google. Amazon is taking first product searches, but Amazon is successful. Why? Because they're online and their physical and they have fulfillment, and I don't see how Google is going to be able to just enable others and nuts have to sit there and watches. Amazon takes more and more of their business and I believe face book is in a similar situation, which is why I've written that. I think Facebook should take a look at acquiring Shopify or eBay and then giving Facebook users the ability to do all the shopping they need from their Facebook user page, be able to make a purchase and then share what they purchase was all of their contacts all of the friends on Facebook and leverage that enhanced social media. So now we have retail and social media integrated in a single platform, and that's why I believe we have some really interesting things that could happen in retail if Google goes down the path I stated, or Facebook or both. And then there's Microsoft out there. There are some really interesting things. The question I have is this. Are the executives at Google, Facebook and Microsoft capable of thinking as big as Jeff basis and if they're not Amazon just going to win this whole thing?

Radu Palamariu:   32:21
And in the future, there is also the risk for at risk for Amazon to be declared in Monopoly. If you know anyways, you, no matter what happens, the by all by all guess is they will continue to grow and they, you know, by many my by many accounts, the most boldest and big big thinkers in the in the market. So if that happens and at some point, you know, the government decides to say, Hey, guys, you're you're a monopoly, then obviously there will be quite disruptive. You did share a TTE some point in your in one of your posts that they might want to strategically think of breaking it up and make Amazon Web service is a separate company. Then make Emma's on logistics and fulfillment of full fledged three pl and then potentially acquire target or court sco sco are so forth so that they get their grossly capabilities and and, um, um and the network spread Tell us a little bit about this, these three points because I think you raised a very interesting angle.

Brittain Ladd:   33:27
Well, the the reason why I wrote about that is I actually researched the potential of Congress and the Department of Justice going after Amazon to say that they are a monopoly. And so I spoke to members of Congress. I spoke to the Department of Justice and it was interesting. The Department of Justice really didn't care that Amazon has 4% of retail in the US, some 5% globally. They told me they wouldn't care if Amazon had 50% of retail in the U. S and 60% globally until Amazon actually starts getting closer to that 65 to 70% range. The way that the antitrust laws are written today, Amazon really has a lot more room to grow. But there was something interesting. I made this comment to one of the attorneys at the Department of Justice, and I said the reason why standard oil was broken up is because the Supreme Court ruled they were a restraint on trade. You can't make the argument that Amazon is restraint on trade because there's so many retailers there, so many market places. And I said, however, what if the language in the commerce Clause was changed to necessity for trade and that's when the discussion really became interested? Because the department justice stated if the language was changed from restraint on trade to necessity for trade, because Amazon is the hub of online demand generation, you could make the argument that in order to be successful in retail, ah Miss Fisher. If you don't have physical stores, it's a necessity to use Amazon, and by that definition they actually would be able to be cleared a monopoly much easier. So when I was thinking through this, I said, Well, if I'm Jeff Bezos and I'm an executive at Amazon, what should I be thinking? And that's when I I went through this exercise of saying What should we do? And I do believe that it's in Amazon's best interest to control their destiny. And so I do believe Amazon to give serious consideration to deflating any chance of them being pursued as a monopoly, especially if President Trump wins reelection. I think it's a possibility that Congress have taken action, so I I can imagine that that Amazon could take a WS as a separate company. They could take retail and fulfillment as a separate company. They could take logistics as a separate company, and I think it just makes sense for Amazon toe. Look at doing that so that they break themselves up. But they do so in a way where they still try and and ensure the ecosystems remain in place. The the capabilities are all remain in place and that even though they're separate companies, the customer experience doesn't suffer. Um, and that's where those thoughts came in that I put in that that Lincoln opposed that you refer to. But I If if the pressure increases on Google and Facebook, um, I think it's going to increase on Amazon. So I truly believe between 2020 and 2024 will know, Um, is Congress serious about going after Amazon? And I won't be surprised if they are

Radu Palamariu:   37:00
and specifically on the point with building their three P L capabilities and and actually offering three Pierre service is to the to the market and Amazon being able to do that. I think there's been quite a bit of discussion on that. We have a lot off clients from the three people safe from the logistic side that preparing for this for this scenario, which they probably don't like a lot. Also, we've seen FedEx and UPS. I mean specifically FedEx because they decided to discontinue their partnership with partnership or relationship with Amazon. They took a fairly big hit on there on their stock price. How do you see this Possible? Because still, I mean Toby be to become a full fledged three. Pl requires a huge network. You, Jess. It's which Amazon, you know today. Credit has been building tremendously in the last couple of years, but I just like I like youto expand a little bit on this particular point.

Brittain Ladd:   37:53
Well, my first role at Amazon, I worked in Amazon global logistics, and what I was responsible for was designing strategies for Amazon to become a global third party logistics company. And what I focused on was how many distribution centers worldwide did Amazon need? How much, in terms of transportation full truckload? Lt L Ground. Ah, what about parcel? How many parcels, flirtation centers and so forth. How many aircraft? And I worked with several people internally, and we designed new strategy ship with Amazon, for example, the Amazon Global Logistics Amazon three. Pale Service's. And we believe my team believed at that time and and my still him in touch with him. And we believe to this day that no later than around 2024 to 2025 Amazon will have a network globally that will give them the ability to go public as a three pl and ah As of today, I believe the global contract logistics market is around 800 billion and the analysis that my team and I did, we are confident and I'm still confident that if Amazon does go public is a three pl. Within the 1st 12 to 24 months, Amazon will take 12 to 20% of the global three pl market. Because no. One there is not a three pl out there that will have the networking capabilities that Amazon has or will have by 2025. And you have to remember you have to take into account a W s, the retail amazon dot com fulfillment by Amazon all of their facilities. But the fact that by 2025 Amazon will probably have close to 100,000 or more of their own DSP Delecti direct service provider vehicles. They will have thousands of trailers, actually thousands of trailers today, so the number could be in the hundreds of thousands. They are amassing this massive network and this massive these massive number of assets And what what's happening is that Amazon's winning the retail battle. So when you are target or your gap or you're some other company or your own automotive company making auto parts. Why would you not take Amazon upon their offer if they come to you and say, Give us all your parcel, Give us all of your auto parts. You shut down all of your facilities will take all your auto parts will pick him up, direct from your factories, and we'll put him in our network. We will do all deliveries to your automotive dealerships, and we'll even give you the ability to go direct your customers. So why wouldn't advance auto parts for Reilly auto parts? Why wouldn't John Deere some other industrial companies say, Why do we need a supply chain of Amazon Conduce this for us and Amazon will, on average, based on the analysis that my team and I conducted, Amazon will be able to do this at about 30% less on average, then cos conduce it today, and Amazon could go to say the gap, for example, and say, Why do you need to manage your supply chain will put all of your inventory in our fulfillment centers will replenish to your stores and will ship product, direct your customers and what's going to happen is that there's going to become a reality by 2025. Amazon isn't going anywhere. And if Amazon isn't broken, Oppa's a monopoly Amazons here to stay. And what I argue to executives is that Justus, you have a digital strategy. You better be thinking what's going to be your Amazon strategy by 2023 to 2024 to 2025? Because if you have an opportunity to leverage, Amazon is a three pl, and they can reduce your costs by 30% without minimizing your ability to compete at the store or online. Why wouldn't you take Amazon upon that? And there are some executives to say, Oh, we would never do that. It's easy to say that today because Amazon doesn't offer the service. I want you to stand in front of your board of directors in 2025 say to them I could reduce our costs by 30% but I don't think it's smart to do that with Amazon. I'm convinced most boards of directors will fire whatever CEO says that. So I always have stated the future of Amazon is being a three pl not a retailer.

Radu Palamariu:   42:42
Um and I need to ask you this question. If you were a three pl um, your d chill Schenk Acuna Nagle Expo. Whoever ups for that matter, what could they do, right? Because it's it's it's kind of Ah, they're stuck in between ah, rock and a hard place in In some ways, they Yeah, that I you know that there's a certain lack of innovation or true innovation that that has come up in the space that some have done a pretty good job. But still, when you put it across as opposed to competition from Amazon and I don't know what, what can they actually do?

Brittain Ladd:   43:23
Well, in all honesty, part of my role at Amazon was being a devil's advocate. And so what I specialized in was saying, Okay, if what I just mentioned becomes a reality and Amazon is a three pl what are the moves that Shankar that D h l. That FedEx ups one of the things that they couldn't do, And I never was able to come up with anything that could harm Amazon if these companies continued to operate independently. However, if these companies were willing to enter into agreements where they would truly collaborate and where they were willing to create a new platform, a new marketplace where they're able to resist Eve, inbound shipments or or inbound orders and basically volumes of orders. And instead of saying, Well, this is for me only it's FedEx for Mia's UPS or D H L. What it does is it just simply says, what's optimal? What's optimal for us to meet this demand. And in essence, if they collaborate in Cree and work as a coalition, the combined UPS FedEx D H L X p o the other three, the other three peals out there the ocean lines, all that their scale would be larger, then Amazon scale. And so these companies, if they operated as a coalition, they could actually pressure Amazon, and they actually would have an ability to be price competitive with Amazon. When I reached out, however, to executives at these companies and I said, Hey, I'm Britain, lad, I work for Amazon and I'm doing this research and I wantto I want to walk you through something and I want your opinion. Not one of them said, Hey, it's a bad idea. They all said, Hey, it's a great idea. But I said then will you sign up for it? And they said, No, Um, they said, This is really tough for someone like a D H, L or UPS to say we are no longer an independent company. We are now part of a consortium or coalition, and these companies, they generate revenue by what they provide in terms of a service. Their stock price rises and falls with their ability to generate revenue and market share. All of that would go away. And unless those companies are willing to go private and unless there's a mechanism to take them private, this what I outlined in terms of the coalition would be very, very difficult to make a reality. So in all honesty, they need to start thinking about this now. Um, instead of a 2023 or 2024. And the only other thing I think they could do is if they look for massive merger and acquisition opportunities, toe where they truly say, Let's just merge, let's just merges, equals, let's make acquisitions and let's carve out bigger, a bigger presence in Europe, the US, Asia and so forth. So we make it much more difficult for Amazon to truly have price. Ah, leadership role in price. Ah, they have a bigger network than we do and everything. But again, you have to have executives who are willing to think big like that and who have the courage to do that. And again. Ah, in 2013 when I was evaluating the grocery industry, I said Amazon acquire Whole Foods. But I went to the retailer Kroger, and I said, I think Amazon should acquire whole foods, So why don't you acquire whole food? And at the time, Kroger was actually evaluating multiple companies to acquire, and Kroger said, We don't think Amazon ever want Stone stores. And so Kroger acquired a company called Harris Teeter. When Amazon acquired Whole Foods. One of the executives I worked with in 2013 called me and said, You have no idea how much we wish we would have acquired Whole foods because they knew that Amazon was going to become a really significant competitors. So the challenge is, although you believe and I believe Amazon can become a three p l. I'm not convinced. The executives at the's logistics companies believe Amazon, ca Ndu that and I think what we're going to find is Justus. Kroger didn't acquire Whole Foods. A lot of these three PL executives are going to say I don't think it's gonna be a reality. And then one day they're gonna wake up and read. Amazon is now the largest global three pl

Radu Palamariu:   48:11
yes, let's let's see the future. The future is there to show us. But Britain has been a has been a definitely thought provoking and super interesting conversations to really appreciate your thoughts, case studies and on Greely sharing of your views of what would happen in the in the future. So I'll make sure to play playback this podcast every year and we'll see What? What's the status of your predictions? I'm pretty sure some will come through so many things. I also urge our listeners toe find Britain on on Lincoln. We will share his profile also on the focusing on the links on our website because I think he is somebody that you should you should keep in touch in terms of following his thoughts and, yeah, many things once again for joining us today.

Brittain Ladd:   49:01
It's truly been my pleasure. Thank you So much for inviting me. Thank you for listening. If you like what you heard, we should to go to www dot

Radu Palamariu:   49:10
elka global dot com included the podcast button for all the show. Notes of the interview also subscribe to our mailing list to get our latest updates. First, if you're listening through a streaming platform like iTunes Spotify arts teacher, we would appreciate a kind of you five star works best to keep us going and our production team happy and, of course, share it with your friends. Most active Arlington. So do feel free to follow me. And if you have any suggestions on what what to do and hooting by next, don't hesitate to drop me a note. And if you're looking to hire top executives in supply chain or transform your business, of course, contact us as well to find out

Brittain Ladd:   49:41
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