Why it matters: Earlier this year, FedEx officially ended its ongoing relationship with Amazon, noting that due to the retail giant’s growing “in-house delivery capabilities,” it was essentially in business with a competitor. Now, in what seems to be a retaliatory move, Amazon is reportedly blocking its third-party sellers from using the service — at least, for ground deliveries.
Air shipments are still a go, but either way, this isn’t great news for FedEx. While the company hardly relies on Amazon to survive (much less Amazon’s third-party sellers), those deliveries likely still generate a nice chunk of change for the shipping behemoth.
There are alternatives, of course, but Amazon is one of the most popular ways for companies to get products in front of consumers across the globe. Everything a seller needs is there: reviews, customer service, dedicated space in each product description for technical specifications, and much more.
With all of this in mind, it seems likely that FedEx will feel this blow, even if it doesn’t come close to sinking them in the long run. Of course, FedEx claims otherwise — a spokeswoman told The Wall Street Journal (the source of this news) that the overall impact on the company’s business will be “minuscule” following this decision.
Amazon, for its part, reportedly claims that a “decline” in FedEx’s delivery performance is the main reason behind the ban. Given that UPS and FedEx both boast similar delivery success rates (and are often rated about the same by consumers, for better or worse), it’s tough to say how accurate that belief is.
The WSJ says UPS managed to deliver 92.7 percent of its deliveries on time during the week after Black Friday, while FedEx delivered 90.4 percent of its packages on time. That’s about a two percent difference, which isn’t much on its own.
Still, when you consider the context — thousands upon thousands of products get sold around Black Friday — that figure probably becomes much more noticeable for retailers like Amazon.
At any rate, this decision, which is reportedly going into effect this week, will certainly be unfortunate news for third-party sellers on the platform. Whether Amazon is satisfied with FedEx’s performance or not, those sellers have just lost one of their already-limited shipping options.
The timing is particularly unfortunate for small businesses and individual sellers. Though Black Friday and Cyber Monday are over, the holidays are still in full swing, and consumers are purchasing last-minute gifts constantly. FedEx fans will now be forced to look for alternatives, which could disrupt their operations a bit.