Pitney Bowes prepares for volume growth from Shein and other new customers

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diving letter:

  • Pitney Bowes expects its package volume to grow year over year in the fourth quarter, helped by the 32 new domestic package customers that have gone live on its network since the start of the third quarter, executives said on a conference call last week.
  • New customers are expected to account for about 20% of domestic package volume in the fourth quarter, said Ana Maria Chadwick, executive vice president and CFO. Notable additions include Hudson’s Bay and Japan Crate, a subscription box company.
  • Fast-fashion retailer Shein, another new customer, represents “an enormously exciting win” for Pitney Bowes, President and CEO Marc Lautenbach said on the conference call. Pitney Bowes began processing packets for Shein in Q3 and expects Shein’s volume to increase significantly in Q4.

Dive insight:

New customer acquisitions throughout the year are leading to rising volumes for Pitney Bowes as the peak shipping season intensifies, despite industry expectations for a more moderate increase in holiday demand compared to 2021.

“Right now, we expect quarterly volumes to grow quite significantly year-on-year and quarter-on-quarter,” Lautenbach said, adding that it’s “going to peak times.”

In the third quarter, the shipping and postal company’s domestic package volume declined year over year, driven by lower e-commerce activity and a decline in inbound packages from China. Lautenbach’s weekly volume increased slightly during the quarter from 2.8 million at the start to 2.9 million at the end. For the first three weeks of the fourth quarter, Pitney Bowes saw activity increase to approximately 3.6 million packages per week.

“We have a very strong pipeline in the fourth quarter,” Lautenbach said. “So we probably have over $100 million in sales that signed on that we’re working on the integration.”

The early increase in volume in the fourth quarter will help Pitney Bowes as it tries to recover from a weaker-than-expected peak season last year. U.S. package volume in Q4 2021 was 20% below what the company had projected as customers grappled with upstream supply chain issues. Experts predict a quieter peak season for 2022.

Pitney Bowes has attracted new domestic parcel customers after significant investments such as automation that have resulted in improved service, Chadwick said. This also helped the company attract more volume from existing customers like Victoria’s Secret and Bark, known for their BarkBox subscription service.

“Our ability to win new customers and win back volume from existing customers is a direct result of our increased levels of service, which position us very well against our competitors,” said Lautenbach.

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