Two years ago, Ryder, a company known primarily for leasing trucks and being a major seller of used vehicles, set up a division called Ryder's E-commerce Fulfillment Solution. It was its version of Fulfillment by Merchant (FBM), an alternative for Amazon third-party sellers and other companies marketing through e-commerce to have shipments of their merchandise fulfilled by a company other than Amazon.
The merchants would continue to sell their wares over Amazon or through its own e-commerce channel but could turn to Ryder or other FBM providers to take care of fulfilling those orders, avoiding Fulfillment by Amazon (FBA).
Ryder now stands as an example of a company hoping to capitalize on a recent decision by Amazon to tighten up its regulations in its FBA program, which Ryder and other FBM programs compete with directly.
"It's a combination of our sales force reaching out to customers," Jeff Abeson, the vice president of Ryder Last Mile, said when asked in an interview with FreightWaves what Ryder had done in reaction to the Amazon changes. "But at the same time in the last week, we're seeing inbound lead generation go up significantly. We have had multiple requests per day to have a dialogue about our capabilities."
Amazon's changes were not announced by the company. But they were reported in Supply Chain Dive, which reported among other things that inventories that Amazon is holding in its warehouses under the FBA program will be limited or incur higher fees. Customers of FBA will be judged on a "productivity" score, with the goal to avoid a buildup of inventory that isn't moving.
Three Hubs Created For The FBM Service
In creating its FBM operation, Ryder set up a network with three warehouse hubs: one in southern California; the second near Dallas; and a third near the Allentown, Pennsylvania storage and distribution hub region. Ryder did not build warehouses for its operations. Rather, it leases space.
"We have an existing network strategy that is very much to compete with the service levels that Amazon has," Ryan Singerline, Ryder's director of customer logistics, said about the company's plans for the service.
The network's locations were set up to service its orders within two days, Singerline added.
Singerline said Ryder set up the group because it sensed that some Amazon third-party merchants were trying to "take the fulfillment piece in-house." Taking it in-house isn't literally what the company does since it would still be outsourcing fulfillment to a separate company like Ryder. But it would be separating to some degree from Amazon.
Singerline said Ryder has long had what he called a "standard model…where we set up dedicated warehousing for specific customers, and contract with them."
The FBM model that the company now has, Singerline said, is the "inverse. We're backing the assets, so we leased warehouse space in Southern California, Texas, and eastern Pennsylvania," he said. "We're really building out this network that strategically gives us positions close to the end consumer." Investment in automation and software is part of the plan.
The difference between what Ryder does in its FBM operation also comes down to smaller steps that wouldn't be offered in the "standard model" of simply offering dedicated warehousing. For example, the FBM offers value-added services like bundling, engraving and gift wrapping, all of which get done at the warehouse space leased by Ryder.
The trucks that are coming in and out of the warehouse space don't tilt toward being Ryder vehicles. But the FBM product of Ryder does offer the management of truck assets as a service, Singerline said.
Abeson said Ryder's FBM service can involve securing transportation. Some of the customers that come to them might not be "mature," he added, "and they come to use as a one-stop-shop that allows us to leverage our ability to procure transportation."
Singerline, when asked what advantage a company like Ryder brings to the table relative to Amazon, said cost was a key consideration. But the Amazon move is giving Ryder a new opportunity, he said.
"I think that a week ago, we were thought of as an alternative," he said. But with the tighter rules by Amazon, "people are now viewing us as whether they can handle it all."
Abeson said the company does have the capacity in its three-site network. "We're still actively taking new customers and integrating new ones every day, so we're well-positioned to grow this business," he said.