Photo credit: Markus Winkler on Unsplash
From ongoing supply chain and port woes tying up production, distribution and fulfillment worldwide to an encouraging bounce on holiday sales, 2021 was an up-and-down affair in retail and ecommerce, but deep-pocket investors saw all kinds of potential as billions poured in and unicorns proliferated.
The supply chain issues dominated headlines all year, with everyday folk suddenly waking up to realize their online orders weren’t arriving by magic after all, then becoming conversant with the concept as the government waded in.
Broken into categories, here is our year in review based on what we saw as the top industry stories of 2021:
Holiday Sales End Year On An Up Note
There was good news at the bottom of all those seasonal carts, both physical and digital, as holiday retail sales jumped a healthy 8.5% over 2020, while ecommerce sales gained 11% off a monster year, according to preliminary data from MasterCard SpendingPulse. This was very close to the 8.3% gain that NRF reported for overall 2020 holiday sales back in January of last year.
As predicted, heavily promoted early shopping, made critical due to the impact of supply chain issues on inventory and stock levels, took off this fall. This helped ease concerns about carrier capacity which had dogged the previous year’s peak season. The early shopping phenomenon led to the unprecedented result of seeing both Black Friday and Cyber Monday sales falling off a tick from 2020 levels.
At least according to one survey of retailers, many took advantage of current conditions to raise prices higher than costs for some profit taking heading into the holidays. Some of it was taken in as gravy at the retail enterprise level, while many SMBs were looking to make up major losses or simply survive an especially difficult period.
The Supply Chain Is Story of the Year
The pandemic quickly exposed major vulnerabilities in the intricate, complex global webs that are retail supply chains. The impact of initial shutdowns in March 2020 followed by labor shortages created a domino effect into 2021 which now stretches at least to 2023. The Ever Given getting stuck in the Suez Canal for six days in March certainly didn’t help matters.
Shortages of available containers and capacity drove prices to astronomical heights as shippers sought alternate means of getting goods into their facilities and out to customers. While there was some talk of reshoring efforts to ease the burden, it was not seen as a viable solution in the near term.
Investments Pour Into Rollups, Others
Rollups, primarily built to acquire a stable of profitable Amazon sellers but coming in a variety of flavors, exploded in 2021. Companies including Thrasio, Berlin, Perch, Elevate Brands and Unybrands all made a splash through major investments, scores of acquisitions and creation of platforms to drive economies of scale.
There was no lack of other investments last year, with companies including one-click checkout platform Fast, SaaS delivery management platform Fareye, ecommerce technology provider Stackline and marketplace optimization platform Pattern all pulling in rounds exceeding $100 million.
Other notable funding rounds were scored by ecommerce fulfillment and services startup Cart.com ($98 million), order picking and packing automation firm Nimble Robotics ($50 million), omnichannel platform provider Newstore ($45 million), warehouse-on-demand software and services firm Flowspace ($31 million), returns technology provider Optoro ($25 million) and last-mile solution platform AxleHire ($20 million).
The Unicorn Is For Real, Sightings Increase
With such massive potential in ecommerce, retail and operations/fulfillment, freighter loads of cash poured in steadily last year. So many companies crossed the billion-dollar valuation mark in 2021 for the first time, it seemed a weekly experience.
In the retail logistics and fulfillment space, companies like supply chain services provider Stord, MFC firm Fabric, Shippo, Locus Robotics, Bringg and Shipbob all joined the unicorn club last year. On the front end of ecommerce, customer data orchestration startup Tealium also tallied up a 10-figure valuation.
Amazon Rocks, Takes Shots
While the Amazon rocket ship, literal and figurative, continued its vertical trajectory in 2021, there were the usual speedbumps occasioned by being a massive enterprise with several targets on its back from regulators, legislators and labor groups. Also, allegations of misdeeds by the ecommerce giant arose, which didn’t help its case.
In February, Amazon was taken to task over an app called Mentor which monitors driver performance, with detractors saying it can interpret legitimate activities as risky ones, resulting in lower scores and sometimes termination.
The following month, a California regulatory agency fined Amazon and one of its delivery contractors $6.4 million for alleged wage theft violations between April 2018 and January 2020, saying drivers were not paid properly on long shifts and often had to miss meals.
Then in April, The National Labor Relations Board accused Amazon of illegally firing two tech workers in 2020 who spoke out publicly about its treatment of fulfillment workers and its sustainability policies, and upheld a complaint by a worker who led a Queens, NY walkout that year.
And at the end of December, the NLRB gave labor groups an early Christmas present: an agreement with Amazon allowing union organizing activity without threat of reprisal. One major union headwind: The high churn rate at Amazon’s facilities.
This past October, a Reuters investigation alleged Amazon set up a clandestine operation that reviewed data from Amazon.in to create cloned products, then manipulated search results to place its items at the top.
Prime Day returned to the summer this past June, after sliding to October in an upside-down 2020, logging a record $11 billion in sales, according to Adobe’s Digital Economy Index, up 6.1% from $10.4 billion. But you can’t please everybody: Bank of America called the results “soft” compared to 2020’s spectacular growth.
By comparison, Alibaba’s Singles Day on Nov. 11 was a disappointment according to many observers. You know things are rough when an 8.5% increase to $84.54 billion in sales is seen as a fail. Culprits ranging from a weak Chinese economy, the pandemic, government crackdowns and supply issues were cited.
USPS: DeJoy Under Fire, Peak Performance Improves
It was a rough year for Postmaster General Louis DeJoy, who has faced withering partisan criticism from Congress over the agency’s performance and his 10-year makeover plan. The new makeup of the agency’s governing board makes it an almost certainty he will be replaced in 2022.
The USPS had an extremely rough peak season in 2020, with Christmas packages arriving throughout January as it became a dumping ground for excess UPS and FedEx capacity. Most recently, however, it posted an impressive 97% on-time performance between Dec. 12-21, according to data from Shipmatrix.