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

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)