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Does FedEx have the wherewithal to go toe-to-toe with Amazon?
Last week the integrator unveiled plans for a “data-driven commerce platform that connects the entire customer journey”, to be launched in the autumn.
According to FedEx, this will make it easier for brands and online merchants of all sizes to “grow demand, increase conversion, optimise fulfilment and streamline returns”, as well as make strategic decisions based on data
The nascent platform, called fdx, is accessible for private previews to clients that sign a form to show their interest. So far, FedEx has not given any indication who is participating.
President and CEO Raj Subramaniam described the plan as a step to take his “company, tools and possibilities for customers” to a new level.
He said: “FedEx is transforming into a digitally-led business powered by our extensive physical transportation network, leveraging our scale and insights from moving 15m packages per day. Through fdx, we will enhance our longstanding relationships with merchants of all sizes to help them optimise and grow their businesses through digital intelligence.”
The announcement is rather skimpy on detail, but includes a string of current buzzwords, like ‘data-driven’ and ‘end-to-end solution’; it claims fdx makes FedEx “the only logistics company to connect the entire customer journey by offering end-to-end e-commerce solutions for businesses of all sizes – all in one platform”.
The absence of detail makes it difficult to see how fdx stacks up vis-à-vis Fulfillment-by-Amazon (FBA). FedEx has clarified that it is not establishing a marketplace, but thatfdx is to give merchants digital capabilities and insights that will help them make strategic, data-based decisions.
Essentially fdx will combine features on the ShopRunner platform FedEx bought in 2020 with some new capabilities. ShopRunner is a subscription-based platform that gives consumers access to over 100 brands and merchants. Subscriptions include exclusive discounts as well as free two-day shipping and free returns.
Features that will be extended to fdx are updates on estimated delivery dates and time windows, shipment status visibility in near-real time, streamline returns and carbon emissions data about shipments. To these, the new platform will add the integration of real-time network insight into order management systems and the ability to provide a “custom post-purchase experience” to match brand standards from order tracking to returns.
In the growing competition with Amazon, the creation of fdx is a logical step. The e-commerce giant has kept expanding its FBA portfolio and services linked to its Prime subscription scheme to include third-party merchants. In 2022, it overtook FedEx and UPS in terms of the number of home parcel deliveries in the US.
FedEx used to haul parcels for Amazon, which accounted for 1.9% of its revenue, but decided not to renew that contract in 2019. Amazon responded by banning FedEx Ground from its Prime offering – but dropped the ban the following year.
The takeover of ShopRunner in 2020 marked a step up for FedEx in the competition with Amazon. In November 2022 ShopRunner introduced a mobile app that gave shoppers a single platform to search for products from multiple brands and retailers as well as order, track and return them.
Observers are viewing the creation of fdx as the next step in the competition, but some have raised questions over whether the integrator has the ability to execute its plan. They have pointed to expressions of low customer confidence in the face of FedEx’s delivery challenges, as it is restructuring its network to match shifting demand, whereas Amazon was seen to offer a more consistent deliveries.
It is difficult to assess the potential of fdx without further details, just as it is impossible to assess at this point if its development will turbo-charge FedEx’s standing in e-commerce; or if this could be a costly challenge on top of the issues the company is already dealing with.