Amazon Blocks Sellers From Using FedEx Ground for Prime Shipments -- 2nd Update
December 16 2019 - 03:46PM
Dow Jones News
By Paul Ziobro
Amazon.com Inc. is blocking its third-party sellers from using
FedEx Corp.'s ground delivery network for Prime shipments, citing a
decline in performance heading into the final stretch of the
holiday shopping season.
The ban on using FedEx's Ground and Home services starts this
week and will last "until the delivery performance of these ship
methods improves, " according to an email Amazon sent Sunday to
merchants that was reviewed by The Wall Street Journal.
Amazon has stopped using FedEx for its own deliveries in the
U.S., but third-party merchants had still been able to use FedEx.
Such sellers now account for more than half of the merchandise sold
on Amazon's website, including many items listed as eligible for
Prime.
FedEx said the decision impacts a small number of shippers but
"limits the options for those small businesses on some of the
highest shipping days in history." The carrier said it still
expects to handle a record number of packages this holiday season.
"The overall impact to our business is minuscule," a FedEx
spokeswoman said.
In its email to merchants, Amazon said sellers can use FedEx's
speedier and more expensive Express service for Prime orders or
FedEx Ground for non-Prime shipments. Amazon declined to
comment.
Daily package volumes double during the holiday season compared
with the average volume throughout the year, and carriers have
battled difficult weather in recent weeks. FedEx, United Parcel
Services Inc. and Amazon are facing a challenging calendar this
holiday season, with six fewer days between Thanksgiving and
Christmas to deliver millions more packages than last year.
During the week after Black Friday, UPS deliveries were on time
92.7% of the time, while FedEx's deliveries were 90.4% on time and
deliveries that Amazon made itself were 93.7% on time, according to
ShipMatrix Inc., a software provider that analyzes shipping
data.
UPS has faced delays due to winter storms in Colorado, Utah, the
Upper Midwest and the Northeast, and has deployed resources and
extended work schedules as a result. A spokesman said that a "vast
majority" of UPS packages are meeting service-level commitments and
that the network overall is performing well.
FedEx said it is experiencing weather challenges and some of the
highest-volume days in its history, but "our networks are flexing
as designed to accommodate the surge of packages." When packages
have been delayed, FedEx said it is working to get them quickly
delivered with a focus on ensuring holiday deliveries make it on
time.
Earlier this year, Amazon and FedEx ended two major shipping
contracts, totaling some $900 million in revenue for FedEx. The
overnight-delivery pioneer is shifting its focus to retailers such
as Walmart Inc. and Target Corp. that compete with Amazon.
The breakup came as Amazon is increasingly building up its own
delivery network. The Seattle giant is poised to deliver twice as
many packages to homes during the holiday season compared with last
year, according to parcel research firm SJ Consulting Group
Inc.
FedEx is slated to report its latest quarterly results on
Tuesday.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
December 16, 2019 15:31 ET (20:31 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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