In a world that is constantly looking for instant gratification, FedEx has set out to do just that. FedEx is seeking growth in the e-commerce industry by launching a next-day delivery service that will help businesses compete with third-party retailers that sell on Amazon and Walmart.
Its next-day delivery option will bring products from your favorite stores and brands the next day if the order is placed before midnight.
While some might expect this move to put a strain on the relationship between FedEx and Amazon and undercut their revenue, FedEx believes this is not the case.
According to a Jan. 29 press release from FedEx, “Amazon.com, Inc. is not FedEx Corporation’s largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3 percent of total FedEx revenue for the 12-month period ended Dec. 31, 2018.”
The e-commerce industry is growing rapidly and, according to Pitney Bowes’ 2018 global e-commerce study, 40 percent of all online purchases are made of retail websites. This accounts for nearly half of the e-commerce industry, upon which FedEx is seeking to capitalize.
However, this could put a strain on other online marketplaces who account for the other 60 percent of revenue.
“It definitely could,” said Natalie Winter, professor of marketing and management. “Amazon and WalMart have tried to capture a significant part of the e-commerce market by focusing on delivery speed. Of course, because Amazon, in particular, is a market leader, it will be difficult for another company to displace it solely by matching its speed of service.”
Looking at Bowes’ study, Winters may have a point. The study shows 76 percent of shoppers prefer free shipping over fast shipping. Free shipping however would be dependent on businesses, not FedEx.
Although the idea of next-day delivery sounds good on paper, some are concerned with the practicality of it and are skeptical of FedEx’s next-day promise.
Jordan Cullberson, sophomore theater major, ordered Beats headphones shipped by FedEx, and the wait took much longer than expected.
“I wouldn’t use it because I feel like UPS is faster and more experienced,” Cullberson said. “My last experience with FedEx would have to be my Beats by Dre headphones, which really took two months to get.”
With next-day shipping rolling out this year, a handful of retailers have already begun to implement it such as Nike, Best Buy and AutoZone, which offers free next-day shipping on select items that total more than $35.