American Eagle wishes to appear more like Amazon.

To not get into the toilet paper and pet food business. However, to be able to manage a key business function during the Covid-19 pandemic. It was the supply chain.

Here is Shekar Natarajan. American Eagle OutfitterThis is the Chief Supply Chain Officer of the company. Since he joined the apparel retailer roughly three-and-a-half years ago, the company has acquired two supply chain businesses for hundreds of millions of dollars and began swiftly building out a logistics platform that others companies — even its rivals in the apparel industry — can utilize, too.

American Eagle is a firm believer that it can take the industry to new heights in vertical logistics and reduce costs. The model will be copied by its peers, who either play catchup or rely on American Eagle for the long-term.

According to Natarajan’s definition of American Eagle, its goal is “to be a successful American Eagle.”UberThe global supply chain should be “ized”, making it an open service that retailers can use. He believes that retailers that are competing for customers in home, clothing and makeup should not also compete with faster delivery times or cardboard boxes.

Natarajan, who spoke to Natarajan in an interview, explained that a group of businesses could ship out as many parcels daily as Amazon’s Seattle headquarters.

American Eagle’s supply-chain platform is the “frenemy network” he calls it.

“The only way that you could actually have Amazon-like scale, Amazon-like costs and Amazon-like capabilities — you have to share,” said Natarajan. Collectively, we could have the exact same [package] volume as Walmart. This is because companies compete on the best things they can do, which are customer service, marketing, and product.

American Eagle saw an opportunity to expand its existing business. It reported record revenues of $5 billion for fiscal 2021. This was 33% more than the previous year. As sales ballooned, so did e-commerce revenue. American Eagle’s digital sales represented 36% of total transactions by the end of 2021, compared with 29% two years earlier.

This means more package shipping to customers and fewer shopping bags at cash registers. It also allows inventory to be shifted around in order to keep up with new demand.

At the same time, backlogs and shortages have snarled the global supply chain due to labor constraints, temporary factory shutdowns and skyrocketing costs to manufacture and transport goods — to name just a few obstacles.

American Eagle doesn’t seem to be immune from these problems. Jay Schottenstein was the chief executive of American Eagle. The company quickly realized its goal to streamline their model and offer retailers assistance in everything. This includes ensuring that multiple products are packed together as well as speeding up deliveries to homes.

Natarajan explained that the strategy was developed pre-pandemic. “We just accelerated almost the entire journey by four years.”

American Eagle shares fell by 60% after the AirTerra deal was announced first surfacedLate August. The retailer’s stock has fallen 33% year-to-date, in comparison to the S&P 500 Retail ETFThe loss was approximately 16% during the same time period.

Natarajan worked for several consumer-facing companies before joining American Eagle. Pepsi Co.It is the Walt Disney Company, Walmart Target — oftentimes within the supply chain division.

He said that these experiences helped him see the differences between the major retailers and the smaller, more local retailers. American Eagle is a good fit for the role, with $5 billion annually in sales.

He stated, “I was always concerned about what would happen to the retailers in between.” It’s not an even playing field.

Schottenstein and he decided to not create an American Eagle network just for American Eagle’s sake, but work together to make a business that can, if it grows enough, be able compete with Amazon’s logistics arm or even offer other options for brands.

Natarajan stated that “the reality is no one owns our supply chains.” Our goods are manufactured in factories which can be used by all retail outlets. They are moved in shared ships.

“But shared capabilities — whether they’re technology capabilities, fulfillment capabilities or transportation capabilities — are the future of this industry.”

American Eagle’s Chief Operating Officer Michael Rempell said the apparel retailer — including its intimates- and swim-centric Aerie business — is already more effectively managing inventories and labor, thanks to its Quiet logistics business.

We ship fewer packages, and they cost us less. [orders]In an interview, he stated, “We are reaching customers 30% faster than we were before.” “Rempell stated that they see the Quiet Platform and American Eagle as tremendous opportunities.

Bryan Eshelman (a managing director of the retail practice at AlixPartners) said that he understands American Eagle’s distinctive approach.

In the midst of the Covid pandemic, retailers who tried to create their supply chains on their own saw these efforts “come back at them,” he stated. This was mainly because it is so expensive to do it all alone. “There has to be a better way.”

Eshelman noted that American Eagle had made “investments larger than it needed.” He said that this will put American Eagle in a better position for the future as long-term supply chain disruptions continue to persist.

American Eagle will not compete with other retailers to get space for its goods in trucks or planes. American Eagle will be pitching itself to other retailers.

American Eagle projects that its logistics business will contribute between 5 and 6 percent to the fiscal 2022 mid-teens growth rate. The company also believes that the supply chain will be profitable this year.

Natarajan will be focusing on the onboarding of more companies in the next few months. He said that the Quiet Platform currently has approximately 50 clients, but Natarajan wants to increase this number to close to 250.

He said, “I am essentially trying Amazon-like capability and cost advantages without being Amazon.”