The eCommerce shipping war heats up further, and this time Amazon is turning the tables on FedEx after an announcement last year that FedEx would cancel their contract with the eCommerce giant.
We’ve been covering the story as it emerges, and you can get up to speed on the history of the conflict with two past posts.
The first, about FedEx opting to not renew its Amazon contract:
FedEx Surprises Amazon with Contract Cancellation
The second, on Amazon building its own air arm:
Transportation Disruptions in 2019
The latest in the story comes as Amazon announces it will block sellers from using FedEx for Prime customer deliveries. Amazon cites “a decline in performance” in on-time delivery as a primary reason for the block. The claim is not without merit, as on-time delivery achievement fell to 68.3 percent, down from 77.5 percent in the same period the previous year.
This is as much about the future as the present, as both companies want to control their destiny independent of one another.
Amazon is a huge generator of eCommerce deliveries and has traditionally depended on partners for the final mile delivery to consumers. As we’ve been noting for months, Amazon continues to invest in the capacity to deliver its own packages – the best evidence of this is the fleet of contractor’s vehicles you likely saw on your street this holiday season.
As many eCommerce businesses have come to find out, it can be difficult to determine whether Amazon is a competitor, customer or ally. FedEx apparently doesn’t like this, which prompted them to make their own move when they canceled their contacts with Amazon in June 2019. We’ve been following some great industry analysis explaining what all this means.
FedEx has not been silent, saying they plan to invest to improve performance, even going so far as to stake a claim that they’ll “lap Amazon in 2021” and improve profitability.
We’re still in the early stages of this battle, and it’s unclear how FedEx (or even UPS) will replace the business they’re losing as Amazon continues progress toward being self-sufficient with deliveries. 2020 is set to be a transitional year for both major carriers, and FedEx has the added pressure of needing to improve both performance and financial results to figure out how to beat Amazon.
For eCommerce businesses, there’s likely to be some confusion as they try to chart a course between longtime shipping partners and Amazon’s growing fleet.
Wondering how (or if) the Amazon-FedEx feud will affect you? Reach out today with questions and comments.
Images courtesy of Pixabay | geralt & kirstyfields
