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It is rare for a large company to boast about its decision to reduce business with Amazon.
However, Friday's announcement by FedEx that it would not renew its express delivery service contract for Amazon in the United States was a sign that it believed e-commerce was more important than a single company. FedEx said its "strategic decision" would allow it to focus on "the broader e-commerce market".
"FedEx has already put in place the network and capacity to service thousands of e-commerce retailers, including brands such as Target, Walgreens and Walmart," said a FedEx spokesperson in a statement. .
According to analysts, Walmart has become a particularly important customer of FedEx. The decision not to renew the contract shows how much the transport company is strengthening its ties with Amazon's biggest rival.
Express service is usually the fastest way to send parcels, including overnight shipments. This speed and convenience have become a necessity for a growing number of American consumers.
Friday's decision also testifies to the fact that Amazon has gone from a mere wanted customer to a direct FedEx competitor. While Amazon has built its own delivery capacity through a fleet of aircraft and to the same day courier services, the internet giant has been able to ship it. even more of its products and control its costs. This put FedEx in an untenable position, essentially competing with Amazon for its own activities.
FedEx is betting on other retailers, who are expanding their e-commerce business but still need transportation companies to help them fill their express orders. According to FedEx, e-commerce is expected to double to 100 million packs a day in the United States by 2026.
"FedEx is sending a message to all the other customers: we are providing you with a delivery capacity consumed by Amazon," said Satish Jindel, founder of ShipMatrix, technology provider for the shipping industry.
Amazon represents only 1.3% of FedEx's total revenues, and the express courier agreement is only part of that activity. According to analysts, FedEx would likely continue to provide Amazon with other services, such as land transport, shipping and international shipping.
The decision to end express deliveries is part of the deep resupply of the retail sector, mainly due to the escalating battle between Amazon and Walmart.
FedEx seems to be alongside Walmart. The retailer has increased its delivery offerings on the same day and day in more markets, which means significantly more parcels. The two companies also recently announced the addition of 500 FedEx points of sale in their Walmart stores.
The e-commerce boom has forced FedEx to look for ways to cut costs, especially on time-consuming residential routes in rural areas. Consumers are now waiting for a free delivery, but it can be expensive for retailers and delivery companies to reach all these remote homes in a short period of time.
Earlier this week, FedEx stated that it was considering hiring 700 flexible part-time workers, who are expected to earn less than the unionized workforce of the company. Amazon already uses a large number of flexible workers to make deliveries.
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