Pitney Bowes, a company associated with shipping and mailing solutions, has seen significant changes over the past few months, driven by its decision to shut down its Global Ecommerce (GEC) unit. And although the company has struggled in certain areas, it is redirecting toward other sectors to maintain its relevance.
Shutting down of Global Ecommerce
The shutdown of Pitney Bowes' e-commerce logistics unit is a major change in the company's business direction. After months of pressure from investors because of ongoing financial losses, Pitney Bowes sold most of its Global Ecommerce (GEC) unit to Hilco Global, which is now closing the business through bankruptcy proceedings.
Even though GEC's revenue grew by 7% in the second quarter of 2024, the decision to close it was made after the unit reported a $31 million loss in earnings.
Pitney Bowes' Global Ecommerce (GEC) was known for its domestic and international shipping services, working with carriers like the U.S. Postal Service to handle final deliveries. It served big brands like Shein, Victoria’s Secret, and BarkBox, making its exit from the market important.
However, because the market is overcrowded with too many shipping options, the shutdown might not cause much disruption. The company says it made this choice due to "economic and industry challenges" and plans to improve its performance by 2025.
The reason?
Pitney Bowes' difficulties are due to several reasons. After the pandemic, demand in the e-commerce logistics market dropped sharply, leading to too many delivery providers and intense competition. Companies like UPS and FedEx have had to offer big shipping discounts to attract customers, which made it harder for smaller companies like Pitney Bowes' GEC unit to compete. On top of that, the logistics industry requires a lot of investment but has small profit margins, making it tough for Pitney Bowes to stay profitable.
Selling the GEC unit was a necessary step to shift the company's focus toward areas with more potential for growth, like its shipping software. By leaving e-commerce logistics, Pitney Bowes is trying to stay competitive in the shipping industry.
Although closing GEC is a big change, Pitney Bowes' new focus might be a smart move that helps the company stay relevant and profitable in a tough market.
What's next?
Although Pitney Bowes is exiting the e-commerce logistics business, it is not abandoning the shipping industry entirely. The company is leaning heavily into shipping software through its ShipAccel platform, which builds on its previous Shipping 360 system. While Shipping 360 targets office shippers, ShipAccel is designed to meet the needs of e-commerce shippers, who deal with a wider variety of package sizes, weights, and destinations.
ShipAccel is designed to grow with businesses, whether they’re small companies shipping 50 packages or large ones handling over 3,000. This flexibility is what sets it apart, according to Gitika Jain, Pitney Bowes' VP of product management. Small businesses can use it through an easy self-service option, while larger companies can integrate it with their systems using APIs, making it convenient for businesses of all sizes.
Pitney Bowes plans to improve ShipAccel by adding new features that help arrange packages more efficiently for shipping. As the market for e-commerce shipping software grows, Pitney Bowes will face strong competition from big players like FedEx. However, the company's long history in the shipping industry might give it an advantage as it moves forward.