At the end of August 2019, FedEx is ending its contract with Amazon for its ground delivery services. The delivery company is looking to expand its business outside of Amazon’s recent additions to its own delivery system.
“This change is consistent with our strategy to focus on the broader e-commerce market, which the recent announcements related to our FedEx Ground network have us positioned extraordinarily well to do,” a FedEx spokesperson said.
Although both companies are going their separate ways, they seem to have big plans for the future to expand their businesses even more.
FedEx is looking to compete with Amazon by teaming up with big companies, such as Microsoft, Google, and Walmart. They are looking to win more business with cashier-less stores and by voice-activated shopping. With these new partnerships, FedEx hopes to be able to compete with Amazon’s stores.
Each year, Amazon is expanding its own network of vehicles and even aircraft. They have gone from working with shipping companies to not needing them anymore because they are creating their own. In June, Amazon announced a Delivery Service Partners Program to captivate entrepreneurs and create a delivery system with at least 40 vans to assist in Amazon’s delivery system. Furthermore, Amazon is looking to debut its delivery drones, while also purchasing new aircraft that will speed up deliveries for Prime members in the U.S. With new trucks, aircraft, and drones they will undoubtedly increase their delivery system speed and provide more efficiency for the retail giant.
Although it may seem FedEx is making a mistake by ending their contract with a big retail giant like Amazon, the revenue they received only accounted for 1.3 percent of the shipping company’s total revenue. Both companies will continue to strive in their own separate ways in the upcoming future.
Written by Fernando Rosell
CNBC: FedEx is ending ground-delivery contract with Amazon
New York Times: FedEx to End U.S. Ground Deliveries for Amazon
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