We often focus on well-funded aggregators snapping up small FBA businesses, but that’s not always how mergers and acquisitions go! In this case, American Eagle Outfitters has acquired Quite Logistics to try to duplicate the FBA model. We will see how this acquisition increases AEOs ability to compete in the eCommerce space.
American Eagle Outfitters (AEO) late last month announced it has completed the acquisition of Quiet Logistics for approximately $360 million in cash. Quiet Logistics operates a network of in-market fulfillment centers in six cities where workers aided by robots fulfill shipping orders for digital apparel and lifestyle brands such as Mack Weldon, Outdoor Voices and Peloton. It was the second logistics company AEO acquired in 2021, after the retailer absorbed e-commerce delivery startup AirTerra, which aggregates shippers. Like AirTerra, Quiet Logistics will act as a wholly owned AEO subsidiary and will continue to run its business independently. The network will support AEO’s continued growth, while also driving economies of scale as it expands its customer base to other brands and retailers seeking advanced logistics capabilities.
Total Retail’s Take: AEO is one of several retailers today looking to bolster its logistics operations following the supply chain woes the industry dealt with throughout 2021. For AEO that means following the same strategy that Amazon.com has pursued with its Fulfillment by Amazon (FBA) service. Amazon’s network of trucks, vans, planes and warehouses serving its third-party retail clients has made it relatively cheaper for Amazon to handle its own in-house logistics. American Eagle sees its acquisitions as a chance to tap into the same benefits, even though it’s a much smaller company. In the meantime, American Eagle gets to absorb the revenue that AirTerra and Quiet Logistics generate in the growing market for logistics services. And with American Eagle now owning both firms, it can prioritize its own needs ahead of other clients in the event of future supply chain disruptions. It’s a win-win-win.