How American Eagle Outfitters is rethinking the delivery box

NRF Supply Chain 360: Chief Supply Chain Officer Shekar Natarajan on shared logistics

The NRF Supply Chain 360 conference and expo was held in Cleveland June 20-21, 2022. It explored the modes and methods needed to build a stronger, more sustainable supply chain and ensure resiliency in challenging times. Learn more about the conference here.

American Eagle Outfitters is out to make friends with its competitors to improve the supply chain for everyone.

“Just imagine a world where every brand was sharing their assets and resources and basically creating a homogeneous thread where the package shows up at your doorstep more efficiently,” the company’s chief supply chain officer Shekar Natarajan said during a keynote session at NRF Supply Chain 360 in Cleveland. “We’re trying to create a new age of supply chain technology and supply chain operations, which I think is going to level the playing field for all people.”

Natarajan presented a shipping box prototype that AEO is developing — a modular, collapsible container that consolidates packages from different retail brands in different locations to ship to a customer. It’s part of AEO’s efforts to revolutionize the supply chain by making it more shared, scalable, hyper-efficient and sustainable through a consolidated delivery network.

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At full capacity, which Natarajan said would be about 3 billion packages, that shared logistics network could save participating companies $40 billion, as well as save 49 million miles. It would reduce the trucking fleet by 90,000 vehicles and shrink retailers’ carbon footprint by 30 percent.

“Look at the world of logistics. It’s anything but sustainable today. Every one of the links of the supply chain is stressed with not having enough resources,” Natarajan said.

“As I project where the world is going to be and see where the constraints are — constraints in labor, constraints in trucking, constraints in how many packages show up at your doorstep — and the ability to deliver all of those things, I see that the world is going to be even more constrained with supply chain assets and so price escalation is going to happen. And to counter all of those, we need to have consolidation networks.”

The shipping box Natarajan showed is just the first generation — a second model will be out in July, with a goal of starting a pilot project at the end of the year.

So far, 70 retail brands have signed on, but the interest is widespread, particularly for small- and medium-sized companies that can’t compete with major retailers.

“In a place where you’re competing on expenses, in a place where you’re competing on products, the last thing you want to do is compete on supply chains,” Natarajan said. “Because competing on supply chains is really competing on resources, labor, utility, land, Mother Nature — and we’re only going to make it worse.”

American Eagle Outfitters Chief Supply Chain Officer Shekar Natarajan talks with CNBC's Lori Ann LaRocca at NRF Supply Chain 360 on June 20, 2022.

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