Chewy Automated Fulfillment Expansion About Labor and Margin: But Can Everyone Do It?

An article in the WSJ discussed Chewy investing in at least 2 more automated fulfillment centers in 2023 to improve safety, margin, and capacity.

Moreover, not enough people want to work in a warehouse; even if they were, you couldn't pay them enough over the alternatives.

A few simple facts out there now that indicate this could be persistent:

* There are more jobs than people in America now and in the foreseeable future (it's not dropping rapidly across all sectors).

* Fed may not be able to kill enough jobs and lower employment enough due to the government's actions (yes, the Fed is tightening, but the Government is still putting a lot of new money into the economy this year - $1T infrastructure + more defense funding, and immigration is still not fully valued).

Simply, any company which is not thinking about automation either within its warehouse facilities is in one of two situations:

* Doesn't need it because their volume is stable and not capacity constrained.

* Is probably slowly losing margin (first) and later market share to its competitors and needs to realize it (i.e., leaving an opportunity on the table).

How is it possible that someone may not realize it? The reality is that the 3PL business is highly fragmented, and hundreds of providers are still in the "dusty four walls and teams of muscle" mode of fulfillment.

There are other simple facts involved, including:

It takes experience to implement automation successfully. Giving a thousand monkeys a typewriter will not produce Shakespeare any more than RFID will revolutionize our supply chains. It takes people and processes to make it work.

Not all 3PLs have this experience.