Economic Policy
by Martin on December 17, 2019

Amazon suspends FedEx’s delivery service on some Prime shipments

As tensions grow between two of the biggest retail and delivery companies, Amazon goes step ahead by blocking its third-party sellers from using FedEx delivery on some of its Prime orders. As the company elaborates, this decision is only temporary – but no exact dates were provided – and includes just FedEx ground delivery.

While the holiday season is slowly creeping in, the delivery deadlines are also approaching and Amazon wants to fulfill all of them on time. As it turns out, the retail company isn’t exactly satisfied with how FedEx ground delivery handles its on-time shipments.

Amazon not happy with FedEx’s performance

Regarding Cyber Monday, the years’ second-biggest retail “holiday” after the Black Friday, a consultancy firm called ShipMatrix published statistics on how various shipment services handled on-time deliveries.

As the data shows, Amazon’s own delivery system – van drivers – had the most successful delivery rates at 93.7%. Next came the United Parcel Service (UPS) with 92.7%, the U.S. Postal Service with 92.3%, and FedEx Corp at the last position with 90.4% successful shipments.

However, ShipMatrix President Satish Jindel goes on to explain that these services cannot be compared directly. Since Amazon van drivers mostly do short-distance deliveries, it’s easy for them to reach high success rates.

On the other hand, FedEx and UPS cover the entire country; sometimes, they even go from the Atlantic coast all the way to the Pacific. Therefore, they’re more susceptible to distance disruptions, as well as weather and geographical barriers.

Things started to go South this summer as the tensions between the two companies became public. Just a couple of months before that, Amazon revealed its plans to turn two-day shipments into one-day deliveries on millions of Prime orders. That was why FedEx suspended its shipment contracts with the retailer.

FedEx air delivery is still available, says Amazon

News of this suspension is likely to hit a number of third-party retailers on Amazon which, as FedEx representative adds, will limit their delivery options on this holiday season. But as Amazon further explains, retailers can still use FedEx’s other, more expensive, services for their Prime deliveries, including FedEx air delivery.

Besides, the FedEx ground and home deliveries are only restricted on Prime shipments, as they’re more time-sensitive for the company than other orders. Therefore, non-Prime deliveries are still eligible for FedEx ground shipment.

The decision was made public as Amazon undergoes increasing scrutiny from the U.S. legislators, as well as labor advocates and other consumer protection groups. As ShipMatrix’s President explains, Amazon’s decision has nothing to do with how FedEx handles the on-time deliveries. It’s more about “irritation” accumulated in their relationship.

And the third-party sellers, as well as the customers who pay $119 per year for their Prime memberships, will now have more incentives to re-evaluate their preferences and potentially look for other retail brands.

By Martin

Martin has been a Trader for 5 years now. He has experience in trading Forex, stocks, and cryptocurrencies. Aside from his trading career, he also worked for a UK news outlet as a web article writer and interviewer for 3 years. His insight on news and brokers have been refining for the past 4 years.

More content by Martin

Comments (0 comment(s))

Copyright 2020