Business Insider: American Eagle Outfitters has quietly acquired a nascent logistics startup helmed by a former Walmart e-commerce boss

In an unusual move for a retailer, American Eagle Outfitters (AEO) has quietly acquired a logistics startup called AirTerra, the retailer confirmed to Insider. 

By: Emma Cosgrove | Link to article

AirTerra is a Seattle-based logistics startup cofounded by former e-commerce logistics leader at Walmart and Nordstrom, Brent Beabout. It claims to “level the playing field for small and mid-size shippers” by aggregating packages from multiple senders to get better pricing, and designing efficient routes to the final destination using regional parcel carriers and the USPS. 

AirTerra had not raised any publicly disclosed funding when it was acquired, and the companies did not publicly announce the acquisition.

In an industry that tends to outsource the work of moving goods, it’s unusual for a retailer to acquire a logistics company, but not unheard of: Target, for one, purchased Shipt for $550 million in 2017. But compared to Shipt, AirTerra is tiny: It shipped its first packages just this week, according to sources familiar with the company, and offers shipping to 61% of the US population. (American Eagle’s two publicly disclosed acquisitions in the last 10 years were both clothing brands.)

American Eagle painted the acquisition as part of an ongoing supply chain transformation — a plan it fast-tracked due to the pandemic, COO Michael Rempell told Insider in February. Priorities included opening smaller urban distribution centers and using data to make sure inventory was stored in the best possible place for fast delivery. The company said in June it had increased shipping efficiency and cut 1.5 days off of its average shipping time. 

But medium-sized shippers like AEO are in need of even more delivery capacity going into their second holiday season in a pandemic. Last October, AEO began a partnership with ShopRunner (recently acquired by FedEx) to offer free same-day shipping to six major cities, and expanded the program to 50 cities in June. Rempell said the team prides itself on being “aggressive adopters of new tools and technologies,” in a Medium post announcing the expansion

Working with AirTerra could be another step in that direction. 

“We have already made tremendous strides in our efforts to increase speed, resiliency and diversification; yet believe we have an incredible opportunity before us to become even faster, more agile and more efficient,” AEO Chief Supply Chain Officer Shekar Natarajan, told Insider. “The acquisition of a leading logistics business, AirTerra, and the deep experience its leadership team brings, only further fuels our excitement in the pursuit to provide a differentiated, best-in-industry experience for our customer.”

(Natarajan worked with Beabout when the two overlapped at Walmart from 2014 to 2016.)

Beabout was a top-tier e-commerce leader at Walmart when the retailer acquired Jet.com in 2016 and placed startup cofounder Mark Lore at the helm of its online strategy. In early 2017, Beabout left to become Chief Supply Chain Officer of Nordstrom. He has also held engineering and supply chain roles at Amazon, DHL, and Office Depot. 

Other leaders at AirTerra include Walmart transportation alum Erik Milici, warehouse operations expert and Prologis alum Jim Bowes, and Larry Arnstein, who spent 11 years at Impinj, the company behind the RFID technology that enables checkoutless stores.  

AirTerra will operate independently, with AEO and other retailers as customers. American Eagle’s CEO is billionaire Jay Schottenstein, who also serves as chairman of AEO’s board, and executive chairman of the board for footwear retailer DSW. A source familiar with the deal predicted DSW would also likely work with the startup.