Retail Supply Chains

Last year hammered home something clearly to supply chain professionals: disruption is the norm, rather than the exception.

Between increasing tariffs, labor unrest across several freight modes and multiple extreme weather events disrupting operations, companies faced an onslaught of challenges in 2024. Such disruptions have called for companies to continue forming more nimble and resilient supply chains, said Jess Dankert, VP of supply chain at the Retail Industry Leaders Association.

“The retailers are really more focused on what they can control, and that's their supply chains, and the supply chains that they've built to be responsive to disruptions,” Dankert said.

As companies gird themselves for this year’s potential disruptions, here’s a look at the trends that will shape 2025 for supply chain managers.

Diversification will be critical

Promised tariff hikes from President-elect Donald Trump and other geopolitical tensions have already led many companies to reshape their procurement networks to avoid an over reliance on single source supply bases. The moves build on years of sourcing shifts since Trump’s first term.

Countries such as Vietnam, Mexico and India experienced a dramatic rise in export activity to the U.S. between 2018 and 2024, per a December 2024 analysis from AlixPartners, while China experienced a 22% drop during the same time period.

This diversification trend will continue in 2025, particularly as companies pursue even more limited exposure to China amid mounting tariff pressure, said Jonathan Gold, VP of supply chain and customs policy for the National Retail Federation.

Meanwhile, other companies may rely more on third-party logistics providers to improve their diversification efforts, experts said

Expect automation and AI to accelerate

Automation within the warehouse environment will gain more ground in 2025, per experts, providing benefits such as improved inventory optimization and enhanced safety. However, an age of “dark warehouses,” or facilities run entirely with minimal to no human input, is not on the horizon.

For some segments, the push for more technologically advanced facilities could further incentivize companies to partner with 3PLs.

“Building warehouse capacity can be very capital intensive depending on levels of automation thus partnering with 3PLs who continue to add capacity and grow their networks can be an attractive course of action,” said Ron Scalzo, a senior managing director at FTI Consulting, in an email.

The application of AI is still far from universal in the supply chain ecosystem, but retailers and manufacturers are continuing to evaluate the technology, experts said, noting the potential benefits to be gained in terms of visibility and forecasting.

To really gain the potential benefits of new AI technology, however, companies must ensure they have quality data collection and analysis.

“Everybody's got a ton of data,” Dankert said. “It's just those who can use it better, and sort through it better and find the signal in the noise are the ones who are really the leaders in the space.”

Supply chain experience is now customer experience

Just as supply chains remained resilient in 2024, so did consumer spending. There was a 2.15% year-over-year increase in total retail sales through November, according to the National Retail Federation, even as inflation failed to slow as quickly as expected.

Although spending increased, shoppers have continued to illustrate more discerning buying patterns, particularly emphasizing value-oriented products, according to experts. That increased customer scrutiny is also extending to retailers’ supply chains.

“I think that attention has really helped shed light on the fact that supply chain isn't just a backroom kind of thing or warehouse kind of thing,” Dankert said. “It's very much kind of front and center with consumers, and something that is visible to consumers and important to consumers in many ways.”

With supply chains now more consumer-facing, particularly in the retail space, there is more pressure to create a holistic experience that meets the demand of individual shoppers. This will force retailers to ensure they are more precisely managing inventory so they can provide consistent experiences across their channels.

“Consumers may be shopping digital channels first, but they are back in stores and incredibly frustrated when pricing is inconsistent or they can’t find in-store what they saw online — they are tired of doing the work,” said Sonia Lapinsky, partner and managing director and leader of fashion retail at AlixPartners, in an October 2024 press release. 

Efforts to satisfy customer demands also will continue to push forward product delivery solutions, including “last meter” delivery, according to Rick Jordon, a senior managing director at FTI Consulting.

Through this process, customers can have things shipped to them wherever they are. With companies like Amazon already experimenting with the technology needed for this type of pinpoint delivery, the trend isn’t going to slow down anytime soon, according to FTI Consulting’s Scalzo.

Labor and transportation costs will rise

Companies, particularly manufacturers, will face increased labor costs within their supply chains this year, according to Satish Damodaran, a senior managing director at FTI Consulting.

“The biggest challenge that I have seen with my clients and most manufacturing companies is shortage of labor, and especially skilled labor,” Damodaran said, creating a cascading effect of high turnover requiring more investment in recruitment and training.

Even with a resolution to East and Gulf Coast port labor talks, with some ocean shipping alliances shifting, rates could also rise this year, Dankert said.

On the ground, after a two-year decline, trucking spot rates began to climb toward the end of 2024, a trend that will likely continue in 2025.

“The general consensus is rates have bottomed, and they need to start coming up off the bottom, which obviously will lead to higher costs,” Jordon said. 

Keep watch on cybersecurity and cargo theft risks

Companies that move freight, particularly retailers, have been forced to contend with an increase in cargo theft in recent years, putting drivers and products at risk. In Q3 2024 alone, cargo theft activity rose 14% year over year, accounting for more than $39 million in stolen goods, per CargoNet. Warehouse and distribution centers were the most targeted location type for cargo theft during the quarter, according to the report. 

The threat has caused action at the federal level, with the Federal Motor Carrier Safety Administration introducing a new registration system this year while multiple acts of legislation are under consideration, including the Safeguarding Our Supply Chains Act.

Although that bill remains in committee, there is hope that more efforts will be made to address the issue this year, Dankert said.

Supply chain management professionals also need to be wary of threats to cybersecurity, an issue that disrupted supply chain operations multiple times last year, most notably through a ransomware attack on vendor Blue Yonder in November.

“I think supply chains, by nature, are a lot of connection points, and so there's potential for exposure there,” Dankert said. “So I know that our members are very much focused on cyber security as it pertains to supply chain.”

Especially given the increasing digitization of supply chains, the keys to ensuring cybersecurity protection will fall in line with the overall need for diversification and resilience.

“Having those redundant systems and protections in place is something that is vital,” said the NRF’s Gold.

A reduction in U.S. tariffs on China-made goods has generated optimism among direct-to-consumer shippers, but there’s still plenty of work ahead for their supply chains to adjust to evolving trade rules.

Direct shipping models have faced tariff and compliance-related turbulence since the U.S. eliminated de minimis eligibility for China and Hong Kong products on May 2. The exemption, which allows sub-$800 imports into the U.S. to avoid added duties, has long helped Shein, Temu and other e-commerce companies keep prices low when shipping China-made orders to consumers.

The trade tool's usage plummeted when the change took effect, as it exposed low-cost imports from China — where the bulk of de minimis activity comes from historically — to 145% tariffs. Daily de minimis volume has seen a decline "upwards of 85%," Chris Mabelitini, director of U.S. Customs and Border Protection's intellectual property rights and e-commerce division, said during a May 7 panel at the agency's 2025 Trade and Cargo Security Summit.

"We've gone from, say, almost 4 million a day to maybe around 600,000 a day," Mabelitini said, according to a recording of the event viewed by Supply Chain Dive. "So it's been a significant decrease in those low-value de minimis shipments coming in.”

At least some of that drop can be attributed to formerly de minimis-eligible products entering the U.S. through other entry methods. One popular option since the changes is Type 11 informal entry, which generally allows sub-$2,500 imports to pass through customs in a more streamlined fashion.

"It's a good indicator that those de minimis shipments are being consolidated into other entry types, which is what we want to see, and the shift that we're looking for there," Mabelitini said.

Tariff pause optimism: Enough for a rebound?

How the 90-day tariff reduction between the U.S. and China, which took effect May 14, will influence direct-to-consumer trade flows from China is up for debate.

For Portless, which provides direct e-commerce fulfillment from the country, President Donald Trump's duties dropping from 145% to 30% has generated optimism among the brands it works with. CEO Izzy Rosenzweig said companies can manage a 30% tariff with cost-savings initiatives and price increases, adding that he hopes ongoing trade negotiations will lower the rate even further.

"Now we're doing a ton of shipments," Rosenzweig said. "Brands are doing marketing again. There is a lot of optimism going on with this discussion, and that there's a bit more structure behind this discussion, and it doesn't feel like it's cowboys just shooting at each other."

Dropping the duty rate is certainly more palatable for shippers, but some experts said it will aid companies' transitions to traditional supply chains rather than fully revive de minimis-associated import methods. Businesses have already been exploring the addition of U.S.-based fulfillment partners and alternative sourcing options, like Vietnam.

With the tariff reduction in place, Cirrus Global Advisors founder Derek Lossing expects a partial rebound in direct-to-consumer shipping activity out of China but not enough to fully recover from recent lows. Many e-commerce sellers will begin shipping bulk inventory via ocean carriers for U.S. storage, rather than using air cargo to ship individual orders to shoppers, he added.

"I think we will see a structural shift from air to ocean long term," said Lossing, a former Amazon Logistics leader.

Temu has been a major driver of air cargo activity out of China in recent years, but the company has relied more on fulfilling U.S. orders via local sellers since the de minimis exemption changes. Lower China tariffs offer an opportunity for the e-commerce marketplace to stockpile inventory in warehouses ahead of any potential duty escalations, according to Thomas Taggart, VP of global trade at Passport, an international shipping and compliance provider.

Alongside the general tariff reduction, the Trump administration lowered the duty rate on international postal volume from China and Hong Kong from 120% to 54%. Transportation carriers can also opt to collect a $100 per-package fee instead. Experts said with the international postal system's limited use in direct-to-consumer shipping, the changes won't make significant waves.

"Postal volume is pretty much nonexistent right now out of China, Hong Kong, Macau, so I don't know if that's gonna encourage people to go back," Taggart said.

Compliance struggles post-de minimis

The de minimis exemption's end for China-origin goods has exposed many importers to tariffs and more stringent information requirements that they could previously avoid. Compliance with the wave of new trade requirements hasn't been consistent or spotless, experts told Supply Chain Dive.

Misrepresenting a shipment's country of origin to evade higher tariffs, such as by giving a China-made product a "Made in Vietnam" label, is one of the illegal tactics experts highlighted. Another illicit approach is shipping an item from China to another country prior to U.S. entry in an attempt to circumvent tariffs on that trade lane.

"We expect to see a rise in country-of-origin fraud via tactics like falsifying customs entry documents, invoices, or product labels, and transshipment where goods are routed through third countries to conceal their true origin," LVK Logistics CEO Maggie Barnett said in an email to Supply Chain Dive.

All products made in China and Hong Kong are ineligible for de minimis treatment, even if they are shipped into another country prior to U.S. entry, CBP noted on its website. This includes products shipped via the international mail system.

CBP enforcement efforts are becoming more rigorous and shippers can't gamble on avoiding duties by not accurately disclosing the country of origin, Barnett said. For example, shipping provider Chit Chats said its border crossings from Canada to the U.S. were denied on May 2 and May 3 due to some misdeclared China-origin shipments from customers.

"The fallout from getting the country of origin wrong can be pretty wide-ranging and painful," she said. "For example, US CBP can deny entry for shipments or worse, actually seize your goods. You could also be hit with hefty fines much more serious than a slap on the wrist."

Mabelitini didn't bring up any specific compliance issues that emerged after the May 2 de minimis changes. However, the CBP official said during the May 7 panel that the agency is still pushing importers to provide more detailed product descriptions. Vaguely describing the contents of a shipment as a gift or a shirt won't cut it, and the intended recipient should also be accurately listed.

"No one's putting Santa Claus, which we've seen before," Mabelitini said. "There were a lot of superheroes who received packages last year from de minimis.”

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Every organization is under enormous pressure to increase warehouse productivity and improve efficiency in today’s labor-constrained environment. The solution many companies are looking toward? Warehouse automation.

The global market for warehouse automation is expected to grow from $26.5 billion in 2024 to $115.8 billon by 2034, representing an annual growth rate of 15.9%. This high level of investment makes good business sense. Blue Yonder has helped many customers achieve cost, efficiency, accuracy and speed gains by embracing automation and robotics in their distribution centers (DC).

However, not all warehouse automation projects achieve their desired outcomes. While automation can increase efficiency and reduce variable costs, a certain level of task volume and uniformity is typically necessary to obtain the benefits.

One solution is the range of new flexible automation that can benefit the average enterprise that has more varied tasks and work volumes.

• Flexible automation helps address the challenge of market and demand volatility, which is only increasing.
• As future warehouse resource requirements become less predictable, flexible automation has become more sought-after for its ability to support a broader range of needs, at lower volumes and a lower level of capital investment.

In specifying and installing flexible DC automation, however, organizations need to recognize that people are more adaptable than even the most flexible automation system. Even in today’s age of digitalization and robotics, human workers are still ideal for complex processes that require flexibility and adaptability.

At Blue Yonder, we believe the secret to warehouse optimization lies in determining the proper mix and application of automation, labor and technology to achieve the desired performance for each specific warehouse operation. A holistic approach—guided by business objectives, informed by operational assessments and measured by financial impact—maximizes the probability of success for warehouse transformation efforts.

First: assess your operations to gain efficiency insights

The first step in optimizing warehouse automation? Blue Yonder recommends a thorough evaluation of people, processes and technology to gain a thorough understanding of your current practices and opportunities for improvement. Companies like DSC Logistics have achieved significant operations improvements and financial benefits by not only establishing efficient manual processes, but leveraging those insights to adopt automation in a strategic, targeted way thereafter.

By taking a process flow perspective, companies can determine how each warehouse activity impacts the cost or performance of complementary tasks within the broader warehouse landscape. This approach uncovers opportunities to:

• Better coordinate tasks
• Sequence activities
• Implement more effective methods

An objective assessment can also uncover widespread inefficiencies—such as frequently performed tasks that are not performed optimally, impacting both cost and service. While the impact of discrete, repetitive tasks may appear minimal when viewed in isolation, small improvements across a high volume of daily activities can deliver substantial overall improvements.

Expectations for a reasonable amount of change should also be included in the planning process to assure successful outcomes for a range of likely scenarios. A transformation project that is optimized for an outcome that doesn’t occur is clearly a suboptimal outcome in itself.

Next: make continuous improvement a way of life

Another key success factor? Creating a culture of continuous improvement. Introducing a continuous improvement mindset enables ongoing productivity enhancements in DCs that are likely to experience shifts in fulfillment demands, resources and processes. Blue Yonder can help with this challenge as well.

Solutions such as Blue Yonder Labor Management provide visibility into labor and robotics performance, uncovering opportunities for process and utilization improvements. By embracing advanced technologies, warehouse teams can:

• Continuously implement process changes
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• Integrate warehouse automation into existing processes

When managing a hybrid environment with manual labor and automation, warehouse teams can also leverage Blue Yonder Warehouse Execution System to achieve real-time insights into workloads, resources and capacities. They can maximize overall performance through dynamic prioritization and increased resource utilization.

4 keys to optimizing your results from automation

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Here are four key takeaways to keep in mind:

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4. Emphasizing process flows, interdependencies and resource utilization drives big returns. Both human and automation resources deliver their full potential when they’re part of a strategic operations footprint.

If you’re exploring warehouse automation, why not connect with Blue Yonder to maximize the rewards? With hundreds of customer success stories, we can provide the expertise you need.

Dive Brief:

• Despite ongoing pressure from tariffs, The Home Depot on May 20 said it doesn’t intend to raise prices.
• “We intend to generally maintain pricing across our portfolio,” Billy Bastek, executive vice president of merchandising, said on a call with analysts. “We’ll continue to use the portfolio approach that we’ve talked about in the past. We don’t see broad-based price increases for our customers at all going forward.”
• The announcement came as the home improvement retailer reported first-quarter sales increased 9.4% year over year to $39.9 billion. Overall comparable sales, however, fell 0.3% from 2024. U.S. comps increased 0.2%.

Dive Insight:

As the industry grapples with the effects of the ongoing trade war, Home Depot executives were optimistic that it would not need to increase prices to mitigate the impact of tariffs.

The Home Depot said over 50% of its purchases are sourced in the U.S., and it anticipates that a year from now, no single country outside of the U.S. will represent more than 10% of its purchases.

“One of the hallmarks of Home Depot has always been diversification,” Bastek said. “A majority of our suppliers have diversified their sourcing strategies across several countries.”

Holding steady on prices stands in contrast to several other companies — including retail giant Walmart — that have said that price increases could be necessary if high tariffs persist.

On top of tariff-related headwinds, Home Depot, like other home-related retailers, faces pressure from a slow housing market. Home sales declined 3.1% year over year in Q1, according to research from GlobalData.

“This lack of recovery makes it difficult to drive home improvement spending,” GlobalData Managing Director Neil Saunders said in emailed comments. “In our view, it is not until interest rates come down substantially that we will see a proper recovery in house moving activity.”

While the retailer’s customers took on smaller projects, in addition to painting and lawn work, there wasn’t much engagement in larger projects, according to Home Depot CEO Ted Decker.

“Obviously we think that will increase,” Decker said, adding that “we're very much looking forward to … when people tap their equity, gain the stronger macro confidence and engage in those bigger projects.”

Home Depot on May 20 reiterated its guidance for the year ahead, projecting total sales growth of 2.8%, with comp sales growth of about 1%. The retailer anticipates gross margin of 33.4% and operating margin of 13%. During the year, Home Depot plans to open 13 new stores.

Retailers’ ability to offer customers many happy returns is becoming more difficult and costly.

Total returns in retail amounted to $743 billion in 2023, according to a report from the National Retail Federation. That equates to $145 million in merchandise returns for every $1 billion in sales. In 2025, shoppers are expected to return $890 billion in merchandise, which represents nearly 17% of retailers’ annual sales, according to a recent NRF report.

Faced with the escalating challenge of returns, retailers are taking diverging approaches to dealing with the issue. And while not all returns involve fraud, that is one of the issues retailers are addressing. Most of the retailers surveyed in the NRF’s latest report said return-related fraud and other exploitative behavior was an issue for their business.

“The rise in e-commerce shopping has led to an increase in return rates and volumes across most categories because online shoppers can’t touch and feel products before they buy,” David Morin, vice president of customer strategy at returns company Narvar, told Retail Dive via email. “The notion that ‘the living room is the new fitting room,’ where consumers try items at home before deciding whether to keep them, has led retailers and brands to review their return programs, including tightening their return policies.”

Buying multiple items with the intent to return some of them, also known as bracketing, has grown among younger people, the NRF found, with 51% of Generation Z consumers acknowledging they’ve done it.

Morin said Narvar’s research has found rising rates of what it terms “friendly fraud” — behaviors like bracketing or wardrobing, where someone buys and wears an item with the intention of returning it. But Narvar also found rising rates of potentially criminal return policy abuse.

“The increase in fraud, along with the heavy incurred costs to retailers, is driving a larger focus on strategies that identify potential fraudsters and create unique workflows to deter the behavior,” Morin said. “Retailers are also balancing out strategies that still reward trusted customers to maintain the sense of ‘peace of mind’ that is critical in returns.”

Indeed, a return abuse or fraud crackdown must be balanced with maintaining customer experience, Katherine Cullen, the NRF’s vice president of industry and consumer insights, said in the organization’s latest report. Other experts echoed that perspective.

“Although Amazon, REI and Target and others have tightened their return policies this quarter to ‘combat fraud,’ the Gen Z and Alpha customers still expect to have a satisfactory and easy ability to return unwanted items in an efficient manner whenever they please,” Shawn Grain Carter, a retail industry consultant and professor at the Fashion Institute of Technology at the State University of New York, told Retail Dive in an email. “This is part of their seamless retail shopping experience of which they have grown accustomed.”

Who gets hit the hardest by returns?

Some categories in particular are more vulnerable to returns. For example, several analysts told Retail Dive that apparel makes up the majority of retail returns.

“This is for multiple reasons,” Neil Saunders, managing director of GlobalData, told Retail Dive in an email. “Sizing is a major issue, especially if buying online, and many consumers will buy multiple sizes and return the ones that don’t fit. How things look in person is important in apparel, and this is another factor driving returns.”

Returns also peak during certain time periods. Besides the holiday season, Saunders said returns typically surge after big promotional periods, like Amazon’s Prime Day. Apparel also follows seasonal trends, which may drive upticks in returns as consumers buy new outfits for the changing seasons, Saunders said.

Additionally, the prevalence of online apparel shopping and an inability to try on items before buying contributes to high return rates in the category, as do consumers’ expectations on issues like fit, color and fabric, Jonathan Zhang, a professor at Colorado State University’s College of Business, told Retail Dive in an email.

And for the same reasons — look and feel — Zhang said home goods, like furniture and decor, also have high returns. “Items in this category are often returned due to damage during shipping, mismatched expectations about size or color, or changes in customer decisions after seeing the product in their home environment.”

Services like Stitch Fix that allow shoppers to try on apparel at home before purchasing came about to help solve this problem. Yet many such offerings have shuttered in recent years. Amazon also made a major change in January involving its own apparel try-on service. The retailer plans to phase out its Try Before You Buy service, effective Jan. 31. The program allowed Prime members a seven-day trial of select apparel, shoes and accessories. Amazon said it’s ending the service as an increasing number of customers turn to AI-powered features like virtual try-on as they shop for apparel.

Regardless of the driving factors for returns, the rising tide of returned merchandise also poses a sustainability issue for retailers. More than 11% of the $100 billion worth of purchased apparel that’s returned to retailers eventually ends up in a landfill, according to research by Equal Ventures, a venture capital firm.

“Consumers are increasingly aware of the environmental impact of returns, such as waste from disposed products and emissions from reverse logistics," Zhang said. “Retailers are under pressure to address these concerns, either by encouraging exchanges over returns or by implementing fees to disincentivize habitual returning behaviors.”

How are retailers responding?

During the last couple of years, retailers across the industry have made some noteworthy return policy changes. A key driving factor, according to industry experts and retailers themselves, is the escalating cost and volume of handling returned merchandise.

In 2024, Morin said Narvar saw about 25% more retailers charging for return shipping. Many others shortened their return windows, especially retailers that had policies longer than 30 days.

“Rising return costs and fraud are pushing retailers to overhaul their policies,” Zak Stambor, a senior analyst for retail and e-commerce at Emarketer, said in an email to Retail Dive. “While many have rolled back free returns, others are taking more targeted steps to cut costs and curb abuse.” Stambor added that the nuanced approaches retailers are employing “reflect the growing pressure on retailers to balance customer satisfaction with operational efficiency.”

Here’s a snapshot of some of the changes retailers made to their return policies in 2024:

• Walmart said it has increased return shipping rates for its third-party sellers. Additionally, the retailer said its Walmart Marketplace sellers can allow customers to keep items and receive a refund, thus avoiding the need to pay for return shipping.
• Amazon in August said sellers using its fulfillment services can now issue product refunds without requiring customers to return the item. The move avoids sellers having to pay for the reverse logistics of accepting returned merchandise.
• Kohl’s began accepting Amazon returns at all of its locations in 2019. In 2024, the department store chain added an additional return service in partnership with Narvar and Inmar Post-Purchase Solutions, which allows customers to return items from several brands to Kohl’s stores, including Carhartt, Hanes and Levi’s.
• REI said in November that it is now declining returns from a “small subset” of its members. These individuals have repeatedly abused REI’s policy, the company told Retail Dive in a statement. The people in question represented less than 0.02% of REI’s 24 million members but had an average return rate of 79%.

Data analytics advancements are now enabling retailers to identify and address return patterns among specific customer segments. Zhang said advancements in data collection make personalized return policies a possibility in the near future, although he cautioned the data should be handled carefully and decisions should be based on actual behavior to avoid any perception of preemptive discrimination.

Morin said another significant factor is that regulations on handling consumer data are becoming stricter. That’s making first-party customer loyalty program and membership data more valuable — and more costly to acquire.

“Loyalty and membership programs are some of the most valuable sources of first-party data for merchants, but consumers, especially younger generations, are increasingly mindful about sharing their data and may only be willing to provide personal information if they perceive the value exchange is equal.”

Morin said some retailers are launching more incentive-based loyalty and membership programs with built-in returns benefits such as free shipping in response to concerns about data privacy. Better logistics and automation could also make the retail returns process faster, more seamless and more consumer-friendly by the end of 2025, the NRF forecast in its report.

Saunders said a leading factor that’s likely to shape future return policies are changes in the cost and volume of returns, along with how rival retailers are responding. “The aim of any retailer is to reduce returns, but this must be balanced against protecting sales,” Saunders said. “Return policies that are too onerous can cost retailers sales.”

ORLANDO, Fla. — A successful omnichannel retail strategy requires a supply chain that prioritizes agility, reliability and communication, Dick’s Sporting Goods executives said at a panel at the Retail Industry Leaders Association’s LINK 2025 conference.

The sporting goods retailer has been at the forefront of the omnichannel retail movement over the last half decade. The trend, accelerated by the COVID-19 pandemic, has pushed companies like Dick’s to create a uniform experience across all customer touchpoints while adapting operations to support those efforts.

Dick’s relies on its footprint of nearly 900 stores in the U.S. to create a competitive advantage in e-commerce order fulfillment. The company now fulfills almost 90% of online purchases from its stores, according to Denise Karkos, SVP and chief eCommerce officer. That’s up from roughly 70% in 2021.

While stores may lack the picking and packing efficiency of dedicated distribution centers, Whitehous said Dick’s can make up the difference by being closer to customers while cutting down on delivery costs.

Adjusting the throttle

To ensure in-store fulfillment efficiency, Dick’s is opting for a more gradual or “throttled” approach to product flows, SVP of Supply Chain Sean Whitehouse said. Finding the right balance is the key to this strategy.

“We need to throttle back at the right level to support and allow those teams in the stores to spend more time engaging with the athletes,” Whitehouse said. “But we can't throttle back so much that we start splitting e-commerce orders.”

Part of the balancing act is understanding the capabilities and capacity of each store, he added. Similarly, Dick’s is focusing on product segmentation to better understand how its goods, whether a fishing lure or a kayak, flow to different parts of the supply chain.

Dick's has also readjusted its shipping strategy. Previously, the retailer prioritized speed but found that it didn't always create the best customer experience.

The company would set a date and then plan to beat that promise, Whitehouse said. However, customers would then question why their orders arrived before they were promised to arrive.

To better meet customer needs, Dick’s now provides several delivery time options for digital orders and communicates them earlier in the transaction process, according to Karkos.

“And so simple things like moving the filtering and the delivery mechanisms earlier up in the journey online has been something that we've seen a lot of success with,” Karkos said.

This approach allows Dick’s to better manage expectations to serve its customers effectively while protecting its brand.

“If you don’t get your pair of Nike Dunks, you’re mad at Dick’s, you’re not mad at FedEx,” Karkos said.

Acing Adaptability

Altogether, Dick’s goal is to keep improving the omnichannel experience for customers by being adaptable.

Karkos said consistent and effective communication, both with customers and associates, is a major driver of success in this area. But much of that communication, especially internally, must be in person.

“You need to deliver upon the athlete’s expectations, and you wouldn't know it unless you're visiting the stores and getting that rhythm of constantly being there to say, ‘OK, teammate, show me the process,’” Karkos said.

As an example, for its buy online pickup in store offering, Dick’s used to give associates a 30-minute window to put orders together, Karkos said. However, the company saw a rise in cancellation rates due to this deadline. After engaging with employees, company leaders decided to extend the window to an hour, reducing cancel rates in the process.

The company is continuing to evaluate its procedures to continuously improve its omnichannel experience for customers. New technology applications are part of those efforts. Whitehouse said he expects the company to eventually have a digital twin of its supply chain to improve decision making.

“We're not interested in being the cheapest supply chain; we're not interested in being the fastest supply chain. We need to be the most agile supply chain,” Whitehouse said.

When Ulta Beauty began its current supply chain transformation journey in 2021, it wanted to do things differently than its competitors.

Other retailers often build large facilities that may go underutilized throughout the year, but Ulta made a deliberate choice to keep a smaller footprint, Chief Supply Chain Officer Erik Lopez said in an interview with Supply Chain Dive.

“We took a differentiated approach to say, you know what, we don't want to just build a one-size-fits-all to the network because you know we have growth, but our growth is not just going to be vertical,” Lopez said. “We have a staggered approach and we wanted to have an MFC [market fulfillment center] model.

Once complete, the model will consist of four regional distribution centers, three market fulfillment centers and one “fast” fulfillment center.

“The beauty of the MFC model is it's faster to build, it gets closer, again keeps all of inventory under one roof and we can do it at an easier clip than doing these bigger buildings that involve a lot more capital,” Lopez said.

Regional distribution centers undergo retrofitting

Ulta currently operates three regional distribution centers located in Dallas; Fresno, California; and Greenwood, Indiana. The company will also start construction of a fourth location in 2026 in Chambersburg, Pennsylvania, Lopez said.

To better optimize its regional distribution footprint for an MFC model, the company plans to add new facilities to its network while retrofitting other locations with upgraded automation technology.

The company completed a technology retrofit at its Greenwood facility in 2023, adding automated receiving systems and residual shuttles, among other upgrades. In 2025, it plans to finish a retrofit of its Dallas distribution center by adding similar automation technology, as well as warehouse execution software, Lopez said. The company expects to eventually streamline to a single consistent operating model as it retrofits its other distribution centers.

Lopez said the warehouse execution software will act like “the brains of [Ulta] facilities and controls the flow of goods through its facilities,” Lopez said.

The decision to retrofit facilities wasn’t due to previously used automation technology being substandard, Lopez said. Instead, the company considered the needs of its employees to find ways to provide them with opportunities to upgrade their skills while making processes more efficient.

What Ulta tried to do with the new automation is focus on reducing steps, reducing waste and be less labor intensive, according to Lopez.

Ulta’s ERP connection to market fulfillment centers

In addition to its supply chain transformation, Ulta is also undergoing what it calls Project SOAR, which stands for Strength, Optimize, Accelerate and Renew. The project is a business-wide enterprise resource planning upgrade intended to accelerate and renew its core operations. While supply chain isn’t the main focus of the project, the company is still seeing benefits on that side of the business as a result of the upgrade, Lopez said.

More specifically, the upgrade has helped unlock the foundation of its market fulfillment centers called cross-docking capabilities.

Cross docking allows for minimal or no storage in between loading and transporting an item. For example, products are inventoried and shipped from an inbound origin and directly loaded onto outbound transportation, Lopez said. This allows Ulta products to move from a regional facility to an MFC directly to stores.

“Without the cross-dock functionality, we wouldn't be able to open up the market fulfillment centers and we would be stuck with the one-size distribution center model,” Lopez said.

Compared with its regional distribution centers, which average 650,000 square feet in size, Ulta’s Market fulfillment centers are smaller, measuring about 300,000 square feet on average, according to Lopez.

The market fulfillment centers can serve up to 120 stores and 25,000 e-commerce orders per day, Lopez said. They also have a limited assortment of products made up of what the company classifies as its highest moving inventory.

Each facility is equipped with automation technology, including Very Narrow Aisle Pallet Racking, or VNA, which allows for tighter aisles to help gain more capacity. Ulta also uses wire guided routes in these facilities, meaning associates don’t need to train to drive equipment.

“They can just hop in equipment and that wire guided system actually does all the work for them … It's easier to train, easier to onboard and it helps our associates be more efficient,” Lopez said.

Ulta currently has two market fulfillment centers located in Greer, South Carolina, and Bolingbrook, Illinois. In 2026, the company will start construction on a similar facility based in the Pacific Northwest that is expected to open in 2027, Lopez said.

A fast fulfillment center for speedy e-commerce

The third element of Ulta’s micro-fulfillment model is its “fast” fulfillment center in Jacksonville, Florida.

The center, which only handles e-commerce orders, strengthens Ulta’s ship-from-store method, Lopez said. Initiated in 2019 with a five-store testing phase, Ulta’s ship-from-store program now encompasses more than 500 stores.

In 2018, a fast fulfillment center was expected to be able to fill up to 30,000 orders per day during peak times, increasing Ulta’s network capacity and progressing towards its goal of two-day e-commerce shipping by 2021, former CEO Mary Dillon said during a Q4 2018 earnings call. Today, the facility can serve up to 25,000 orders per day.

Besides wanting things fast, Ulta’s customers want options, Lopez said, particularly when it comes to delivery modes.

The work is all part of the company’s journey to omnichannel fulfillment, which allows it to provide variety to customers, whether that’s to buy online and pick-up in store or receive same-day delivery through DoorDash.

Ulta is still in the midst of its supply chain transformation, but it is "constantly looking at ways to evolve and improve our supply chain operations to meet the needs of our guests," Lopez said.

Dive Brief:

• Amazon unveiled several new robots it's planning to deploy throughout its logistics network in announcements on May 7.
• The functions and benefits vary by robot, but they largely focus on eliminating or reducing manual employee tasks. Amazon's automated "Tipper" robot, for example, automatically unloads packages from carts brought by employees to conveyor belts.
• “We want to create more high-skilled work that is ergonomically sound for everyone at our facilities,” said Nicola Fyfe, VP of Amazon Logistics in Europe, in a news release. “Technology is helping us achieve this vision by creating better, safer work environments inside our delivery stations.”

Dive Insight:

Amazon's newest robots aren't taking over its fulfillment centers and last-mile delivery stations just yet, as large-scale deployment will take years. Still, the company said the technologies at its Dortmund, Germany, facility offer a glimpse into what the company expects its network will look like in the future, with machines taking on much of the heavy lifting.

Working conditions for employees within Amazon's warehouses have faced scrutiny through the years. A Senate report in 2024 suggested the company's warehouses created a "uniquely dangerous" environment for its workers, a claim Amazon refuted.

"Since we've been pretty substantially integrating robotics into our fulfillment network over the last many years, we have seen cost-savings and we've seen productivity improvements and we've seen safety improvements," CEO Andy Jassy said on a February earnings call. "And so, we have already gotten a significant amount of value out of our robotics innovations."

The e-commerce giant currently has more than 750,000 robots deployed in its network, all of which play a role in completing over 75% of customer orders, Amazon said in its announcement covering the "Vulcan" robot.

Vulcan has a keen sense of touch, allowing it to carefully and easily manipulate objects within inventory pod compartments, according to Amazon. The robot's capabilities allow it to pick and stow items in the top rows of these pods, removing the need for employees to use step ladders to reach those areas.

"Vulcan does this using an ‘end of arm tooling’ that resembles a ruler stuck onto a hair straightener, plus force feedback sensors that tell it how hard it’s pushing or how firmly it’s holding something, so it can stay below the point at which it risks doing damage," Amazon said.

Amazon and Walmart are pushing to make their fast delivery options even faster.

While many smaller shippers are opting for slower, lower-cost delivery services, the retail rivals are strengthening their already robust in-house logistics capabilities to boost delivery times and grow their same-day reach to more U.S. shoppers. Amazon is further optimizing and growing its fulfillment network, while Walmart is shipping many orders directly from stores.

"Whether it’s being delivered from a store, a club, or a fulfillment center, or whether it arrives on the ground or through the air with a drone, we’re getting things to people faster," Walmart CEO Doug McMillon said during an April 9 investment community meeting.

No matter how they’re accelerating shipping, executives at both companies say improved speeds are worth it, with shoppers showing a demonstrable interest in getting their orders sooner.

"When we promise faster delivery times, customers complete purchases at a meaningfully higher rate and shop with us more frequently," Amazon CEO Andy Jassy said in an April 10 letter to shareholders.

Walmart touts tech upgrades, 'ultra-fast delivery' plans

Walmart is using its expansive network of stores and new technology to boost its fast delivery reach throughout the U.S., executives said during the investment community meeting.

The company can currently reach 93% of U.S. households with same-day delivery and aims to increase that to 95% by the end of 2025, said Dave Guggina, chief e-commerce officer of Walmart U.S. He noted the company's fast delivery reach covers top markets like Dallas as well as smaller rural communities like Elizabethtown, Pennsylvania, and Leonard, Texas.

"This growth was made possible by technology we deployed to more accurately predict how far our delivery service can reach," Guggina said.

The geospatial technology Guggina referred to, detailed in a news release, allows Walmart to adjust delivery coverage areas with improved accuracy. Instead of using ZIP codes to determine coverage boundaries, Walmart divides an area into hexagonal grids featuring real-time data like store capacity, driving time and customer demand. Twelve million more households have access to Walmart delivery as a result.

Walmart is also looking to make same-day deliveries faster to keep up with customer demand. For about one-third of store-fulfilled orders, shoppers are choosing to pay a fee to get it delivered in three hours or less, U.S. CEO John Furner said.

"We see this capability as a key advantage over even someone who can deliver 'Same Day.' Because 'Same Day' might be a 4-hour window later today," Furner said.

To build on that advantage, Walmart U.S. plans to test an "ultra-fast delivery" service that reaches customers in 30 minutes or less, Guggina said. The offering will be based on lessons learned from the company's international business — the majority of Walmart's e-commerce orders in China are delivered in less than an hour, and full basket size orders in Mexico's larger cities are being delivered as fast as 45 minutes.

Drone deliveries, another method to accelerate delivery, are already an option for eligible Walmart customers in the U.S. seeking deliveries in 30 minutes or less. The retailer has completed 120,000 drone deliveries so far, with some of that activity coming from its Dallas-Fort Worth test market, Furner said. The company plans to keep expanding its drone delivery reach, he added.

Amazon 'not done improving speed,' CEO says

Amazon is looking to build upon the 9 billion items it delivered either the same or next day in 2024.

The company's increasing number of same-day deliveries is driven in part by its shift to a regionalized fulfillment network and the launch of same-day delivery sites, Jassy said in his letter to shareholders.

The number of same-day delivery facilities in Amazon's network grew by 60% in 2024, now serving more than 140 metro areas, Jassy said in a February earnings call. These facilities feature smaller footprints and a streamlined handling process that results in faster fulfillment versus traditional locations.

Amazon’s growing same-day delivery services are available in markets such as Atlanta and San Francisco, along with smaller communities like Cedar Rapids, Iowa. 

"Although we’ve set speed records for two consecutive years, we’re still honing these innovations, and have others planned," Jassy said in the letter. "And, don’t forget Prime Air, our drones that will get items to customers inside an hour. We are not done improving speed."

Since November, Amazon's MK30 drones have been making deliveries in parts of Arizona and Texas. While drones come with their share of regulatory and cost-related hurdles, Jassy noted in the February earnings call that the technology is particularly helpful for customers ordering pharmacy prescriptions or "everyday essentials" like baby and pet food products.

Amazon is also investing in delivery service improvements for rural customers. The company has expanded same-day and overnight delivery to dozens of smaller U.S. cities and towns, with more to come, Jassy said in the letter to shareholders.

"This expansion will provide even faster Amazon delivery speeds for many millions of customers, particularly in less densely populated areas, enabling us to deliver over a billion packages each year to customers living in 13,000 zip codes spanning 1.2 million square miles," he said.

A federal court on May 28 blocked many of President Donald Trump’s sweeping tariff executive orders, saying the president overstepped his use of emergency powers to enact them.

The United States Court of International Trade issued an injunction on four executive orders that called upon various national emergencies to enact tariffs on Canada, China and Mexico, and a 10% global tariff plus additional reciprocal tariffs. The injunction called for the government to stop any operations related to those tariff orders, and to issue administrative notices on the permanent injunction within 10 days.

Lawyers representing the Trump administration quickly appealed the decision to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., and have 14 days to file additional documents supporting their case. The ruling has since been paused until further notice, per a May 29 order from the U.S. Court of Appeals for the Federal Circuit.

The injunction came as the result of several legal cases wherein a few small businesses and several U.S. states filed separate but similar petitions to halt the tariffs, arguing their imposition via the International Emergency Economic Powers Act overstepped presidential powers. The court eventually sided with the plaintiffs and ruled it was appropriate to block the executive orders that imposed the tariffs as a result.

“The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs,” the court panel’s opinion reads. “The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders.”

Beyond broad tariffs on trading partners, Trump also used the IEEPA as the basis to eliminate the de minimis exemption for imports from China and Hong Kong. The White House plans to end de minimis treatment for other countries' products under the act, once systems are in place to collect the additional duties. Those changes are now in question, too, as a result of the court's decision to halt the executive orders that enabled them.

However, tariffs on automobiles, auto parts, steel and aluminum products were not affected by the injunction, as they were implemented under a different trade authority: Section 232 of the Trade Expansion Act. Similarly, any tariffs implemented under Section 301 will remain in place.

Trump is not the first president to have used emergency powers to impose tariffs, per an April report by the Congressional Research Service, although his authority to do so was always in question. In 1971, President Richard Nixon imposed a global 10% tariff to address a national emergency related to the country's economic position.

However, Trump's use of emergency powers is different in a few ways. First, the president has used emergency powers more broadly, claiming crises on immigration, fentanyl trafficking, and disproportionate trade relationships as distinct emergencies justifying new tariffs. Second, the report notes the law Nixon used was since reformed into the IEEPA — the law used by Trump — and that, therefore, the IEEPA's use for tariffs had so far been legally untested.

"IEEPA authorizes the President to 'regulate' a variety of international economic transactions, including imports. Whether 'regulate' includes the power to impose a tariff, and the scale and scope of what tariffs might be authorized under the statute, are open questions as no President has previously used IEEPA to impose tariffs," Christopher A. Casey, analyst in International Trade and Finance for the Congressional Research Service, wrote in the report.

The U.S. Court of International Trade was established by the Constitution and has nationwide jurisdiction over civil actions arising out of customs and trade laws in the country, according to the court’s website. A federal appeals court can review its decisions.

However, several Trump administration officials put out statements criticizing the courts’ action to halt tariffs. White House Deputy Chief of Staff Stephen Miller, for example, said on X: “The judicial coup is out of control.”

And, in a statement posted on X, White House spokesperson Kush Desai said: “It is not for unelected judges to decide how to properly address a national emergency."

A U.S.-China trade war is already buffeting businesses, but some may be more affected than others.

China represented 11% of all U.S. trade in 2024, with electronics, machinery, toys, sports equipment and furniture making up more than half of all imports, per a Supply Chain Dive analysis.

However, in recent months, President Donald Trump has pushed to shift the balance of trade with China by instituting sky-high tariffs on the country’s products. As of mid-April, many imports from China were subject to a series of national emergency-related tariffs that added a 145% levy, on top existing duties. China retaliated in turn with higher levies on U.S. imports.

While Trump has since signaled a potential willingness to lower the tariffs, many businesses have taken action to mitigate rising costs — such as pausing shipments from China or raising prices. If the tariffs persist, the impacts of a U.S.-China trade war will be vast, according to the World Trade Organization, and significantly decrease bilateral trade.

“Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity,” WTO Chief Economist Ralph Ossa said in an April 16 forecast. “Moreover, tariffs are a policy lever with wide-ranging, and often unintended consequences.”

To understand which product categories may be most affected by elevated tariff rates, Supply Chain Dive analyzed the makeup of general imports from China, including overall value, their percentage of overall imports from the country, and the global market share suppliers in China have for U.S. imports of each product.

The analysis reveals, for example, that baby carriages and umbrellas are highly reliant on suppliers in China — as roughly 96% of U.S. imports came from the country in 2024. Dig deeper into the data using the table below.