It’s not often that a market-leading disruptor has the tables turned on them, but that’s what we saw this week when FedEx announced it’s ending a lucrative package delivery contract with Amazon. It’s always surprising when a corporation says no to millions in revenue from a “frenemy,” and it’s even more surprising to see analysts applaud the action, but that is exactly what happened.
Many have said they saw this coming and yes, the signs were there as Amazon has steadily built out its own logistics network over the past few years. But this was a bold move by FedEx, and it seems its board has decided it is best to cut the cord now in order to focus on providing better service to their remaining retail customer base.
Looking forward, FedEx will still supply last-mile services for Amazon, and the departing business represents a surprisingly modest portion of overall revenue. Amazon still has its own expanding network to rely on, and they’ll of course continue utilizing UPS and USPS for additional depth, so don’t be concerned your doorstep will be empty of packages.
The real question is whether Amazon will be able to scale rapidly to support existing business and the investable increases that come with enhanced Prime services.
For eCommerce companies concerned about what Amazon will do next, this is an entirely new kind of worry. It is also a sobering check point for the upcoming holiday season. If there are to be disruptions for Amazon and an opportunity for you to better leverage FedEx, then you must have tools in place to respond. Rate Shopping tools and cost analysis could be your ticket to gaining news sales and protecting your margins. Contact us if you need to enhance your strategy or just want to review your options.
