A bigger threat to FedEx than Huawei? Integration of e-commerce in the United States

Advances from retailers such as Walmart (WMT), Amazon (AMZN) and even Target (TGT) in managing their own express shipping efforts pose much greater threats to FedEx's domestic revenue base than headlines surrounding Huawei.

For reference, FedEx generates approximately 67% of its revenue in the United States and only about 6.7% in China. It is clear that domestic operation is of utmost importance for the future trajectory of society.

As such, a review of its relationship with retailers in the US market is in order as more and more sellers are opting for faster shipping options that can work without partners like UPS (UPS), DHL (DPSGY) and, of course, FedEx. .

Amazon is particularly threatening because of its growing base of premium members and its already well-understood logistics capabilities.

These strengths have recently gained momentum with the expansion of its delivery service partner program, in which it will now provide up to $ 10,000 to fund the costs incurred by individuals to start a delivery business. of parcels at a fast pace.

Amazon and Walmart now have overnight shipping options and Walmart does not even have a membership fee. The fact that large retailers can eliminate courier services and speed up the processing of consumer services makes FedEx services somewhat superfluous.

Of course, the immediate disadvantage is that only gigantic-sized stores like Walmart and Amazon could possibly incorporate this type of program.

However, Target, one of the few winners of the recent retailer profit trend, could show a way to challenge this notion.

The company's acquisition of the company's online trading management Shipt for $ 550 million in 2017 has essentially supplanted its shipping partner needs, and has in fact increased the commitment of its customers. The price of Shipt, which was apparently just as additive for Target as for Jet.com was for Walmart, accounted for about a third of Walmart's blockbuster buyout.

"I believe that our decision several years ago to place our stores at the center of our distribution strategy is paying off with accelerated growth," said Target CEO Brian Cornell. "Our store and supply chain team continues to roll out and develop an exciting and exciting suite of digital processing options.Our customers respond with enthusiasm, generating a rapid growth of our options the same day, including Drive-Up , in-store collection and Shipt. "

It should be noted that Target is still using FedEx and partnering with them to use a stand-alone distribution robot alongside retailers such as Lowe's (LOW).

However, given Target's ability to cash in funds without relying on a major logistics partner in key business areas, it would be logical to think that many retail executives could copy and streamline business activities. FedEx according to their needs.

In addition, unlike its competitors, FedEx is not offered as a shipping option for Shopify (SHOP).

"Shopify Shipping is available for orders shipped from US-based distribution centers (USPS, DHL Express and UPS) and Canada (Canada Post)," says a publication on the website of the US-based help center. Shopify. FedEx is visibly absent from its guidelines, which could sever the company of a considerable number of users needing courier services.

In summary, these underlying trends, which are much closer to home than the concerns that Huawei would be in the headlines on Tuesday, are what FedEx investors' list of concerns should be.

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