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American Eagle: Apparel and Supply Chains

In the aftermath of the COVID-19, frenzied online buying, and supply chain woes impacting many retailers, American Eagle Outfitters introduced a solution. Specifically, the apparel company is developing an effective logistics platform that all retail businesses —including apparel industry rivals—can use. The initiative is dubbed the Quiet Platform.

According to American Eagle Chief Supply Chain Officer Shekar Natarajan, the goal is to create a supply chain that could rival Amazon’s logistic efforts. “The reality is none of us own our supply chain,” Natarajan recently told CNBC. “We manufacture goods in factories that are shared right across retail.” And those goods are transported in business-shared ships. “But shared capabilities . . . are the future of this industry,” he noted.

Executive Chairman and CEO Jay Schottenstein was blunter, however. ″[T]his acquisition is going to be the anti-Amazon,” Schottenstein said during American Eagle’s March 2022 earnings call. “It’s going to give the ability for us and other retailers to be able to compete against the Amazons, the Targets and the Walmarts in the future.”

American Eagle acquired logistics start-up AirTerra in August 2021 and bought Quiet Logistics later that year. According to the release announcing the Quiet Logistics acquisition, the goal was to locate “products closer to need, (and create) inventory efficiencies, cost benefits and affordable same-day and next-day delivery options to customers and stores.”

Now American Eagle is on track to, as Natarajan put it, “Uber-ize” the global supply chain, providing shared services to all retailers. “His belief is that brands that compete for shoppers in clothing, makeup or home goods shouldn’t also be competing over things like quicker delivery windows and cardboard boxes,” the CNBC article noted. In that way, companies can use their time and resources to compete on core activities, such as marketing and customer experience.

In addition to providing logistics services to American Eagle, athletic apparel start-up Outdoor Voices and Boll & Branch (a bedding maker), the platform recently added Saks Off Fifth to its list. The company recently hired Charles Griffith as Chief Technology Officer for the platform; Griffith previously helped Amazon Logistics.

During the company’s earning call Schottenstein indicated that the two acquisitions and resulting logistics platform were already attracting interest from other retailers, though allowed that “it’s a little early to give too much color or too much guidance.”

According to Natarajan, the strategy for the “ultimate frenemy network” had been in the works before COVID-19, adding that “we just accelerated the entire journey by almost four years.”

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Inside The Story

American Eagle's Shekar NatarajanAmerican Eagle's Jay Schottenstein

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