Global Ecommerce was a star revenue generator, but with dwindling profits, there’s no more room for it at Pitney Bowes Inc.
The global shipping and mailing product and services company has sold a controlling interest in Global Ecommerce’s (GEC) U.S. operations to Hilco Commercial Industrial, a unit of Hilco Global that Pitney says will “support a value-maximizing liquidation” under the protection of Chapter 11 of the U.S. Bankruptcy Code.
GEC’s downfall was related to significant changes in the ecommerce industry. Growing ecommerce transaction volume caused Global Ecommerce’s revenue and shipping volumes to rise in recent years. However, Pitney Bowes said profits suffered from the industry’s overcapacity, price competitiveness, and a decline in revenue per shipped parcels as clients sent smaller and lighter parcels and processed fewer returns.
132 retailers in the Top 1000 use Pitney Bowes as a shipping carrier. Those 132 retailers made more than $529 billion in 2023 web sales, according to Digital Commerce 360 data. Additionally, 68 use it for international ecommerce services, and 16 use it for fulfillment services. The Top 1000 is Digital Commerce 360’s database ranking North America’s largest online retailers by their web sales.
Lance Rosenzweig, interim CEO, Pitney Bowes Inc.
Lance Rosenzweig, Pitney Bowes’ interim CEO, said in a statement announcing the Aug. 8 sale to Hilco that the deal provides “an exit path for GEC that provides for an orderly and efficient wind-down of the business.” He also said it “gives us a clear runway to streamline the company and increase profitability across our core cash-generating businesses: SendTech, Presort and Financial Services.”
Pitney Bowes keeps Global Ecommerce’s digital shipping label business in-house
Last year, Pitney Bowes moved Global Ecommerce’s SaaS-based digital shipping label producing business, which accounted for about 3% of GEC’s revenue, to the SendTech unit, a mailing technology and services business.
Rosenzweig said Pitney Bowes will help Global Ecommerce customers during the transition.
“We have reached out to other providers and will assist clients to the fullest extent possible in transitioning to the best alternatives in the market,” he said on a second-quarter earnings call, according to a Seeking Alpha transcript.
He also gave a shout-out to GEC’s workforce.
“I also want to pause for a moment to express our sincere gratitude to GEC employees,” he said. “Their hard work is deeply appreciated and this decision to wind down the business is in no way reflective of their performance.”
“The company expects this exit path to eliminate substantially all of the losses associated with GEC, which were equal to approximately $136 million for the year ended December 31, 2023,” Pitney Bowes said in a statement.
Rosenzweig added, “Selling and controlling interest in GEC to Hilco positions GEC as an independent business from Pitney Bowes, undergoing the liquidation under the ownership of Hilco.”
With GEC, Pitney Bowes Q2 revenue grows 2.1%
- Revenue (including GEC) rose 2.1% year over year to $793.17 million.
- Net loss narrowed to $24.9 million from $141.5 million.
- GEC’s revenue increased 6.9% to $326.2 million.
- GEC’s Adjusted EBITDA loss narrowed to a $17 million. That’s a 26% improvement from a loss of $23 million.
- Its Adjusted EBIT loss narrowed by 17% to a $31 million loss from a $37 million loss. Pitney Bowes said expense reductions drove those net loss changes.
For the first half, Pitney Bowes reported:
- Revenue increased 0.8% year over year to $1.62 billion.
- Pitney Bowes Global Ecommerce revenue rose 2.1% to $659.4 million.
Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.
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