9 ms·

FedEx's new service takes aim at Amazon

65 points by hippich 10y ago

placeybordeaux 10y ago
Seems like a smart move for them, and a win for customers across the board.
chipperyman573 10y ago
It was bound to happen eventually. It's not exactly a secret that Amazon is trying to create their own shipping services. One thing I'm confused about... I can't tell from the article - is this a way of letting people list their products on fedex.com, or is this a way for sellers to hold their products in a fedex warehouse, sell the items on their own website, then tell fedex where to ship it?
- nastysquar3d 10y ago
  My understanding of it is the latter. FedEx provides warehouse space for retailers, and ship directly from their warehouse when an order is placed.
- cptskippy 10y ago
  It's a way for a seller to allow Fedex to manage their inventory. Similar to how you can buy from a third party seller on Amazon and it will be fulfilled by Amazon.
- samtho 10y ago
  > is this a way of letting people list their products on fedex.com, or is this a way for sellers to hold their products in a fedex warehouse, sell the items on their own website, then tell fedex where to ship it? This is the way I understood it. Sort of like a cross between Drop-shipping and FBA but the shipper already has it, eliminating the need for the "first mile" problem (getting the package from the warehouse to the shipper). This enables a seller to do very quick delivers at low cost because they're not running to a FedEx drop off point with a bunch of shipments incrementally.
dogma1138 10y ago
This is funny, if Amazon decides to use Amazon logistics for shipping FedEx will go bankrupt within 6 months probably.
- sethhochberg 10y ago
  Doubtful - Amazon is a huge customer, for sure, but FedEx and co regularly request that Amazon rely _less_ on their services during busy times of year. I'd bet Amazon has ended up at a point where they have been able to negotiate their rates with the other carriers so low based on their volume, that any additional volume isn't worth the cost of handling.
  - johnward 10y ago
    I worked for FedEx Ground HQ and that is basically how it works. Often UPS and FedEx trade high volume customers back and forth because they basically make no profit on them but it keeps the network full of packages. I think UPS, FedEx, and USPS handle my Amazon deliveries. In my opinion it would be more likely for amazon to follow the SmartPost business, if they don't already do this. They would move packages between their hubs and rely on a 3rd party to do the delivery to the house. In the Smartpost network, FedEx would move the package to the closest hub and then hand it off to the USPS for home delivery. Also, FedEx is tiny compared to UPS. I'd guess about 1/3 the size.
    - dawnerd 10y ago
      I think Amazon is already doing that smartpost approach. I've had a package shipped to a local amazon warehouse then sent off to usps for next day delivery. Now with Prime Now they just utilize those drivers.
- toomuchtodo 10y ago
  Fedex does shipping. Only shipping. Not retail. Why would retail customers ever switch to using Amazon for logistics, and pay their competitor? Amazon does enough business to have their own skeleton logistics network, but it'll never have the full network Fedex or UPS has; it simply doesn't have the retail margins to pay for it. Fedex and UPS will do just fine. Amazon is going to have to up its game eventually; investors will tire at some point that Amazon retail doesn't make anything, and is propped up by AWS.
bsharitt 10y ago
While we'll need to wait to seem how the implementation works out, I like the basic idea of this basically being Fulfillment By Amazon, but without having the rely on a potential competitor. It seems like you're an importer who uses FBA(or even just lists on Amazon and self fulfills) you have a short window to make money before Amazon eventually moves in on you to start selling the same thing. Even if you're selling your own stuff, you might not be safe(there's some kind of laptop accessory that I'm trying to remember that basically had an Amazon Basics version come out after being on Amazon for a little while). Don't take this as being against big evil Amazon(I buy tons of stuff from them), but I'd rather them not be the Walmart of the internet that puts all the small web shops out of business.
- AznHisoka 10y ago
  or even the bigger ones like Best Buy, and Office Depot. It's unbelievable that Amazon makes up over 75% of ecommerce sales.
- Eridrus 10y ago
  FWIW It was a laptop stand: https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot-seller-on-amazon-prepare-for-e-tailer-to-make-one-too https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot... Amazon certainly has it easier when they can see sales data on their platform, but Amazon is a huge marketing channel too, and losing that is likely worse than having Amazon compete with you. The products amazon are making are not those which need a whole tonne of R&D, they are as the brand says basics, they don't need to copy anyone to make one, they just need to know that the product category is popular.
Animats 10y ago
More like UPS, which has been doing that sort of thing for years as UPS Supply Chain Solutions.[1] [1] http://www.ups-scs.com http://www.ups-scs.com
CodeSheikh 10y ago
If FedEx can give better commission cuts than Amazon fulfillment and pretty much same delivery speeds then it is definitely a winning situation for FedEx. I envision a future where no one goes to brick-an-mortar stores anymore. Online shopping experience needs to be made intuitive and personal enough that goods get delivered at home. Two days shipping is good but not as good as same as shipping with minimal shipping costs. Still needs work. We are getting there.
joemi 10y ago
While this is great to have another fulfillment service available (though there already are other choices than Amazon for fulfillment services), I'm not so sure how much this will actually impact Amazon. Does anyone know what percentage of Amazon's fulfillment services are used for things not sold on Amazon marketplace?
- throwawaylalala 10y ago
  IIRC- >50%. Source- cant find it atm, but was something I read as part of my business selling online (and most of that on Amazon). This benefits Walmart the most. Currently I don't want to expand my Walmart/Jet/Sears/NewEggeBay business because I'd need to buy a warehouse. Most 3PL's are small mom and pops or tailored to very large companies. If Fedex can execute on this there is alot of mo ey to be made. But the. Again, execution is everything, isnt it? :)
mabbo 10y ago
They're missing the entire advantage Amazon has in the situation: n items, one box. When you buy three items from Amazon, they have the opportunity to put both items into a single box and have a much smaller last-mile cost[0]. With this FedEx program, each item will have its own box and maintain the per-item last-mile costs. Last Mile is the largest fraction of an e-commerce retailers costs after actual products. It's a neat program, but Amazon still has a cost advantage. [0] (Now, they don't always do that, but that's usually in order to make sure the items get to the customer on time, or maybe they're coming from very distant different warehouses)
- petra 10y ago
  Current , something like 60% of FBA orders aren't Amazon sales. So they don't share a box
  - mabbo 10y ago
    Wow, really? Do you have numbers on that? That seems really high.
    - petra 10y ago
      Sorry, my mistake. It's the other way around - 60% of sales on Amazon's marketplace aren't done through FBA.
petra 10y ago
This service is based on Fedex's acquisition of Genco, in December 2014. Genco is a 3rd party logistics services company, offering a of logistic services:from the standard warehousing an fulfillment(including 130 warehouses), to being somewhat of an industry leader at handling returns(and e-commerce has a relatively high rate of returns, especially in fashion), to testing and repairing stuff, and than reselling those. At that time, Fedex also bought a software company that helps other retailers with complex stuff like customs handling. Maybe a total framework to handle all the physical and regulatory stuff and e-commerce play might need. The stuff that enables Amazon to have such a large selection, and the stuff that enables it to be so good at customer service. And that may have been what triggered Amazon to attack Fedex.

65 points by hippich 10y ago

Seems like a smart move for them, and a win for customers across the board.

It was bound to happen eventually. It's not exactly a secret that Amazon is trying to create their own shipping services. One thing I'm confused about... I can't tell from the article - is this a way of letting people list their products on fedex.com, or is this a way for sellers to hold their products in a fedex warehouse, sell the items on their own website, then tell fedex where to ship it?

nastysquar3d 10y ago
My understanding of it is the latter. FedEx provides warehouse space for retailers, and ship directly from their warehouse when an order is placed.
cptskippy 10y ago
It's a way for a seller to allow Fedex to manage their inventory. Similar to how you can buy from a third party seller on Amazon and it will be fulfilled by Amazon.
samtho 10y ago
> is this a way of letting people list their products on fedex.com, or is this a way for sellers to hold their products in a fedex warehouse, sell the items on their own website, then tell fedex where to ship it? This is the way I understood it. Sort of like a cross between Drop-shipping and FBA but the shipper already has it, eliminating the need for the "first mile" problem (getting the package from the warehouse to the shipper). This enables a seller to do very quick delivers at low cost because they're not running to a FedEx drop off point with a bunch of shipments incrementally.

dogma1138 10y ago

This is funny, if Amazon decides to use Amazon logistics for shipping FedEx will go bankrupt within 6 months probably.

sethhochberg 10y ago
Doubtful - Amazon is a huge customer, for sure, but FedEx and co regularly request that Amazon rely _less_ on their services during busy times of year. I'd bet Amazon has ended up at a point where they have been able to negotiate their rates with the other carriers so low based on their volume, that any additional volume isn't worth the cost of handling.
- johnward 10y ago
  I worked for FedEx Ground HQ and that is basically how it works. Often UPS and FedEx trade high volume customers back and forth because they basically make no profit on them but it keeps the network full of packages. I think UPS, FedEx, and USPS handle my Amazon deliveries. In my opinion it would be more likely for amazon to follow the SmartPost business, if they don't already do this. They would move packages between their hubs and rely on a 3rd party to do the delivery to the house. In the Smartpost network, FedEx would move the package to the closest hub and then hand it off to the USPS for home delivery. Also, FedEx is tiny compared to UPS. I'd guess about 1/3 the size.
  - dawnerd 10y ago
    I think Amazon is already doing that smartpost approach. I've had a package shipped to a local amazon warehouse then sent off to usps for next day delivery. Now with Prime Now they just utilize those drivers.
toomuchtodo 10y ago
Fedex does shipping. Only shipping. Not retail. Why would retail customers ever switch to using Amazon for logistics, and pay their competitor? Amazon does enough business to have their own skeleton logistics network, but it'll never have the full network Fedex or UPS has; it simply doesn't have the retail margins to pay for it. Fedex and UPS will do just fine. Amazon is going to have to up its game eventually; investors will tire at some point that Amazon retail doesn't make anything, and is propped up by AWS.

bsharitt 10y ago

While we'll need to wait to seem how the implementation works out, I like the basic idea of this basically being Fulfillment By Amazon, but without having the rely on a potential competitor. It seems like you're an importer who uses FBA(or even just lists on Amazon and self fulfills) you have a short window to make money before Amazon eventually moves in on you to start selling the same thing. Even if you're selling your own stuff, you might not be safe(there's some kind of laptop accessory that I'm trying to remember that basically had an Amazon Basics version come out after being on Amazon for a little while). Don't take this as being against big evil Amazon(I buy tons of stuff from them), but I'd rather them not be the Walmart of the internet that puts all the small web shops out of business.

AznHisoka 10y ago
or even the bigger ones like Best Buy, and Office Depot. It's unbelievable that Amazon makes up over 75% of ecommerce sales.
Eridrus 10y ago
FWIW It was a laptop stand: https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot-seller-on-amazon-prepare-for-e-tailer-to-make-one-too https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot... Amazon certainly has it easier when they can see sales data on their platform, but Amazon is a huge marketing channel too, and losing that is likely worse than having Amazon compete with you. The products amazon are making are not those which need a whole tonne of R&D, they are as the brand says basics, they don't need to copy anyone to make one, they just need to know that the product category is popular.

Animats 10y ago

More like UPS, which has been doing that sort of thing for years as UPS Supply Chain Solutions.[1] [1] http://www.ups-scs.com http://www.ups-scs.com

CodeSheikh 10y ago

If FedEx can give better commission cuts than Amazon fulfillment and pretty much same delivery speeds then it is definitely a winning situation for FedEx. I envision a future where no one goes to brick-an-mortar stores anymore. Online shopping experience needs to be made intuitive and personal enough that goods get delivered at home. Two days shipping is good but not as good as same as shipping with minimal shipping costs. Still needs work. We are getting there.

joemi 10y ago

While this is great to have another fulfillment service available (though there already are other choices than Amazon for fulfillment services), I'm not so sure how much this will actually impact Amazon. Does anyone know what percentage of Amazon's fulfillment services are used for things not sold on Amazon marketplace?

throwawaylalala 10y ago
IIRC- >50%. Source- cant find it atm, but was something I read as part of my business selling online (and most of that on Amazon). This benefits Walmart the most. Currently I don't want to expand my Walmart/Jet/Sears/NewEggeBay business because I'd need to buy a warehouse. Most 3PL's are small mom and pops or tailored to very large companies. If Fedex can execute on this there is alot of mo ey to be made. But the. Again, execution is everything, isnt it? :)

mabbo 10y ago

They're missing the entire advantage Amazon has in the situation: n items, one box. When you buy three items from Amazon, they have the opportunity to put both items into a single box and have a much smaller last-mile cost[0]. With this FedEx program, each item will have its own box and maintain the per-item last-mile costs. Last Mile is the largest fraction of an e-commerce retailers costs after actual products. It's a neat program, but Amazon still has a cost advantage. [0] (Now, they don't always do that, but that's usually in order to make sure the items get to the customer on time, or maybe they're coming from very distant different warehouses)

petra 10y ago
Current , something like 60% of FBA orders aren't Amazon sales. So they don't share a box
- mabbo 10y ago
  Wow, really? Do you have numbers on that? That seems really high.
  - petra 10y ago
    Sorry, my mistake. It's the other way around - 60% of sales on Amazon's marketplace aren't done through FBA.

petra 10y ago

This service is based on Fedex's acquisition of Genco, in December 2014. Genco is a 3rd party logistics services company, offering a of logistic services:from the standard warehousing an fulfillment(including 130 warehouses), to being somewhat of an industry leader at handling returns(and e-commerce has a relatively high rate of returns, especially in fashion), to testing and repairing stuff, and than reselling those. At that time, Fedex also bought a software company that helps other retailers with complex stuff like customs handling. Maybe a total framework to handle all the physical and regulatory stuff and e-commerce play might need. The stuff that enables Amazon to have such a large selection, and the stuff that enables it to be so good at customer service. And that may have been what triggered Amazon to attack Fedex.