COST Costco Wholesale Corporation

By Paul Page 

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Costco Wholesale Corp. admits to being slow to embrace online sales, but anyone who has shipped a one-gallon jug of mayonnaise can understand why. The wholesaling giant is taking a contrarian stance on e-commerce, the WSJ's Sarah Nassauer and Laura Stevens report, even as competitive threats push the company to respond more aggressively to the changes coursing through retail markets. Costco's measured stance is backed by strong store sales that come even as many brick-and-mortar chains falter, and by the tough financial equation that online sales bring to its business. Shipping the hefty-size goods that consumers buy from Costco in bulk could eat into profit margins that are already low for most household staples -- particularly as carriers move to charge by dimension as well as weight. Costco is adding products to its website and investing in distribution centers to speed deliveries, but its online sales growth is slowing and that may leave Costco wondering whether it's moving fast enough.

The West Coast ports labor slowdown is still echoing across the retail world, at least according to one struggling importer. Payless ShoeSource Inc. says the labor woes two years ago helped push the company into chapter 11 bankruptcy protection this week, the WSJ's Jacquiline Palank reports. In a filing that details steep losses and plans to close some 400 stores, the largest footwear chain in the U.S. says its troubles in a changing retail market worsened in 2015. It says the labor dispute that backed up cargo flows kept the company from stocking its shelves during the crucial Easter selling season. By the time delayed inventory arrived, Payless had to sell the shoes at a deep discount "in order to realign inventory and product mix." That left the company without the cash it needed to respond to the growing dominance of e-commerce in consumer markets, a competitive force that is still weighing on the company as it prepares to shutter outlets.

When commodities-trading house Mercuria Investment Co., ING and Société Générale SA in February executed the first delivery of crude oil to run entirely on a blockchain platform, they cut the costs and time needed for the transaction significantly. The banks are now talking about a similar trade in liquefied natural gas, the WSJ's Stephanie Yang reports, part of a growing effort to test whether the technology can solve longstanding problems in the trading of physical commodities. Traders in goods, including a cotton consortium that includes Cargill Inc. and Louis Dreyfus Co., are evaluating how the technology, which records each transaction in an electronic ledger that provides an identical copy to every computer, tracks goods and financial actions through the supply chain. Mallory Alexander International Logistics Chief Executive Neely Mallory remains skeptical after two shipping trials this year, however, saying many U.S. export markets aren't ready to embrace the technology.

E-COMMERCE

Amazon.com Inc. is getting even deeper into warehouse technology. The e-commerce giant is taking a big stake in fuel-cell maker Plug Power Inc. that could make it one of the largest shareholders in a company that helps power material-handling equipment, the WSJ's Imani Moise and Laura Stevens report. Plug Power is a relatively small operation, generating $85.9 million in revenue last year and no annual profits in its 20 years of existence, but its place in warehouses highlights the relentless push Amazon is undertaking to control its supply-chain operations -- and to make its distribution centers more efficient. The tie-up recalls Amazon's $775 million acquisition in 2012 of Kiva Systems Inc., bringing into the company a central player in robotics for warehouse operations. It also puts Amazon in an interesting competitive position. Plug Power's biggest customer last year was Amazon's top rival in the retail business, Wal-Mart Stores Inc.

QUOTABLE

IN OTHER NEWS

General Electric Co. is weighing the sale of its consumer-lighting business, solidifying the industrial giant's move away from consumer businesses. (WSJ)

Private-sector payrolls rose by 263,000 last month. (WSJ)

European investment fund JAB Holding Co., will pay roughly $7.16 billion to acquire food chain Panera Bread Co. (WSJ)

European regulators added their conditional approval to the U.S. nod to China National Chemical Corp.'s takeover of Swiss seed and pesticide maker Syngenta AG. (WSJ)

Gillette is slashing prices for its razors under heavy competition from online retailers. (WSJ)

Government inspections of railroads that haul crude oil found almost 24,000 safety defects, including problems like those blamed in recent derailments. (Associated Press)

China became the biggest buyer of U.S. crude oil in February, surpassing Canada. (Bloomberg)

California's merchandise exports expanded 11% in February. (Sacramento Bee)

Authorities in Aurora, Colo., outside Denver, approved $1.18 million in incentives for an Amazon distribution center. (Denver Post)

India will allow imports of 500,000 metric tons of duty-free raw sugar, as a drought cuts output below consumption levels. (Reuters)

Malaysia is emphasizing e-commerce in its efforts to build up exports of halal products. (Nikkei Asian Review)

Insurers in London issued a guide to potential liquefaction of bulk cargo following the apparent sinking of the ore carrier Stellar Daisy. (Maritime Executive)

German shipping investment house Marenave Schiffahrts will sell its fleet under a liquidation agreement with banks that finance the single-ship companies that legally own the vessels. (Lloyd's List)

Wallenius Wilhelmsen Logistics ASA began trading on the Oslo stock exchange. (Automotive Logistics)

German logistics company Rhenus Group acquired British last-mile operator Network 4 Home Deliver. (Forwarder Magazine)

An enormous tunnel-boring machine called Bertha finished nearly four years of drilling in Seattle to create an underground highway. (Seattle Times)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

April 06, 2017 06:56 ET (10:56 GMT)

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