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Abandoned mall department stores may become Amazon’s next fulfillment centers

One of the largest owners of shopping mall real estate in the United Stages, Simon Property Group, has been talking to Amazon about transforming its anchor department stores into Amazon distribution hubs, according to the Wall Street Journal.

In the case of Simon Property, the anchor tenants like J.C. Penney and Sears that used to be stable sources of revenue are now weights around the neck of the retail real estate manager, and transforming their ghostly halls of pale mannequins into warehouses for Amazon orders simply makes sense.

The transformation from showroom to storehouse for everything from books and sweaters to kitchenware and electronics won’t be too much of a stretch for the vacant storefronts of businesses that hvae both filed for Chapter 11 bankruptcy protection.

Simon’s holdings include some 63 JC Penney and 11 Sears stores, according to the Journal’s reporting citing a May public filing from the real estate developer.

This wouldn’t be the first time that Amazon had turned to mall real estate for fulfillment centers. in 2019, the online retailer acquired a massive physical footprint in Akron, Ohio that it turned into a distribution center.

Gone are the days when gum smacking tweens and teens and their beleaguered parents would head to the local mall for a stroll around the retail block. Now shoppers prefer to peruse online and kids find Fortnite to be the Hot Topic to hang in. 

The deal, if it goes through, would be another nail in the coffin for a staple of late twentieth century culture that now mostly exists in the memory of baby boomers and Gen X consumers (thanks millennials and Gen Z).

Malls these days are lifestyle affairs that promise boutique branded shops than the sprawling department stores that had something for everyone. The big-box spaces that the Journal reported Amazon is negotiating for are the 100,000 square foot, multi-story behemoths, that are likely not long for the long tail world of niche commerce anyway.

These days, consumers are looking for brands that appeal to a persona or the bottom line of a pocketbook, and not the mass casual one-stop-shop of late twentieth century department store off-the-rack identities.

The Journal reported that, if the deals went through, Simon would like rent the space at a considerable discount to what it would charge another retailer. The paper estimated that rents could be as low as $4 per square foot to $19 per square foot, while warehouse rents average about $10.

At this point, shopping malls are looking for anything to bring in money. They’ve already tried schools, medical offices and senior living facilities, but the COVID-19 epidemic has thrown all of those plans into the abyss.

And, as the Journal notes, malls are already located in places that make them attractive distribution hubs. Amazon has bought some sites already and FedEx and DHL have done the same, according to the paper.

At this point, Amazon ownership may be a better fate for the real estate than totally abandoning it to empty space and the lingering soundtrack of 80s rock.

 

India’s FarEye raises $25M to grow its logistics SaaS startup in international markets

More than 150 e-commerce and delivery companies globally use an Indian logistics startup’s service to work out the optimum way before they ship items to their customers. That startup, Noida-based FarEye, has raised $25 million in a new financing round as it looks to expand its footprint in international markets.

M12, Microsoft’s venture fund, led the seven-year-old startup’s Series D financing round. Eight Roads Ventures, Honeywell Ventures, and existing investor SAIF Partners participated in the round, which pushes FarEye’s total raise-to-date to $40 million.

FarEye helps companies orchestrate, track, and optimize their logistics operations. Say you order a pizza from Domino’s, the eatery uses FarEye’s service, which integrates into the system it is using, to quickly inform the customer how long they need to wait for the food to reach them.

Behind the scenes, FarEye is helping Domino’s evaluate a plethora of moving pieces. How many delivery people are in the vicinity? Can it bundle a few orders? What’s the maximum number of items one can carry? How experienced is the delivery person? What’s the best route to reach the customer? And, would the restaurant need the same number of delivery people the following day?, explained Kushal Nahata, co-founder and chief executive of FarEye, in an interview with TechCrunch .

Gautam Kumar (left), Gaurav Srivastava (centre), and Kushal Nahata co-founded FarEye in 2013

“The level of digitization that logistics firms have made over the years remains minimal. The amount of visibility they have over their own delivery network is minimal. Forget what a customer should expect,” said Nahata, explaining the challenges the industry faces.

FarEye is addressing this by using AI to parse through more than a billion data points to identify the optimum solution. In the past one year, it has fine-tuned its algorithm to handle last-mile and long-haul deliveries to offer a full-suite of services to its clients.

The startup, which employs about 350 people, said it is already handling more than 10 million transactions a day. The more transactions it processes, the better its algorithm becomes, he said.

FarEye today has clients across several categories including transportation and logistics, retail (which includes grocery, furniture, and fashion), and FMCG in 20 nations. Some of these clients include Walmart, FedEx, DHL, Amway, Domino’s, Bluedart, Future Group, and J&J. Nahata said the startup will use the fresh capital to improve its predictive tech and grow its footprint in the United States, Europe, and Asia-Pacific region.

“We are solving certain problems for our customers today, but I feel we can solve much larger problems and help digitize the entire supply chain network,” he said.

As the coronavirus pandemic jeopardises grocery and e-commerce firms’ ability to timely deliver items to customers, FarEye said it is making Serve, one of its services that focuses on enabling movement of everyday essentials, free for any firm to use for more than a year.

“The global pandemic has accelerated the need for enterprises to scale their supply chain operations efficiently to meet the rising share of online deliveries. FarEye’s highly configurable last-mile and long-haul logistics platform has been validated by leading global enterprises across the 3PL, retail and manufacturing categories,” said Shweta Bhatia, a partner at Eight Roads Ventures, in a statement.

FarEye has been making money since day one, but Nahata said an IPO is not something on the table for the foreseeable future. “Our biggest focus right now is to grow,” he said.