PFSweb to Provide Logistics Services for Military Exchange

April 14, 2009 Alex Woodie

PFSweb will provide comprehensive order fulfillment services for the Army & Air Force Exchange Service (AAFES), the organization charged with running exchanges on U.S. Army and Air Force bases around the world. The five-year contract, which is valued at $15 million, calls for PFSweb to manage inventory and ship orders originating from AAFES’ e-commerce Web site and catalog operations.

The AAFES was created in 1895 by order of the U.S. Government’s War Department to set up a market or store at every military post, where practical. Over the next 114 years, the organization has evolved to meet the changing needs of America’s military, and by 2008 had grown to claim the number 28 spot on Retailing Today’s annual list of the Top 150 retailers.

By outsourcing its e-commerce and catalog fulfillment operations to PFSWeb, the AAFES will be able to tap into the expertise of this Plano, Texas, company, which started out as the logistics arm of a large American wholesale distributor. Today, PFSweb offers its collection of hard assets (warehouses, call centers), soft assets (customized JD Edwards-based fulfillment system and e-commerce expertise) and skilled personnel to Fortune 500 companies.

Under the agreement, which was signed in December, PFSweb will provide order fulfillment from AAFES’ printed catalog and the Exchange Online Store, www.aafes.com. It will also provide the necessary technology skills to connect AAFES systems with PFSweb’s ordering and logistics systems, which run on System i servers. The company will receive, manage, and safeguard AAFES inventory, provide direct-to-consumer order fulfillment, and manage customer returns from one of its warehouses in Memphis, Tennessee, PFSWeb says.

“We are working with Army & Air Force Exchange Service to provide a custom logistics solution to support its catalog and website, which brings together over 32,000 warehoused products as well as inventories of numerous drop ship vendors,” says Mike Willoughby, president of PFSweb’s services division. “AAFES is a distinguished organization that offers products to active and retired U.S. military personnel and their families around the world, and we are pleased to have been selected to support these efforts.”

PFSweb, which is a publicly traded company, previously marketed a middleware product that it developed to expose i5/OS transactions as XML. Although it still sells the technology, today, the company appears to be more traction selling product from www.ecost.com, its discount e-commerce Web site.