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Oct 08, 2020

Heavy bulky market: Fragmented and fast-growing

As e-commerce continues to take market share from brick-and-mortar retail, the heavy bulky last-mile market is seeing rapid growth, with reverse logistics as a particularly strong revenue driver.

That was one of the takeaways from a fireside chat between Kirby Fine, principal, ATL Partners, and Gordon Branov, CEO of Pilot Freight Services, during the FreightWaves Last Mile Logistics Summit on Thursday.

The heavy bulky market, Fine noted, is a highly fragmented space, and although it is smaller than the parcel market, it is also growing at a more rapid clip. The U.S. bulky market clocks at $13 billion, vs. $114 billion for parcels. But the bulky market is growing at a rate of 12%, compared to 9% for parcels.

Additionally, whereas four players control 90% of the parcel market, Fine said, no single player represents more than 7% of the heavy bulky market.

Pilot’s business-to-consumer service focuses on bulky, nonconveyable items that require some type of value-added service, Branov said, such as installation or assembly.

Business picked up considerably following the government lockdowns tied to the coronavirus, with strong growth in outdoor equipment.

But even before the COVID-19 pandemic, furniture and appliances, along with sports and fitness equipment, were among the highest-growth categories in e-commerce, according to Fine.

Reverse logistics is having a big impact on the industry. Overall, the return rate is around 30% percent in e-commerce and 10% for brick-and-mortar purchases, said Branov.

The increased demand for reverse logistics presents opportunities, but operationally there are challenges.

“Returning a refrigerator back to a shipper is a lot more complicated than a brick-and-mortar return,” Branov said. “But if you can do it efficiently it is profitable — it is one of our more profitable sectors from a net revenue” perspective.

Elaborating on that, Branov said since bulkier items cost more to transport, the cost efficiencies have to come from technology investment, not movement. Pilot is investing in a range of IT, from route optimization to text messaging, in order “to squeeze as much efficiency out of the supply chain that we can.”

“We look at tech investment as a way to scale our business,” Branov said.