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FedEx and Amazon Playing Nice Again? - ShipRx
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2 minutes read

FedEx and Amazon Playing Nice Again?

Consider this: during the 2023 holiday season, shoppers in the US spent a staggering $254 billion online. However, this seemingly lucrative figure is overshadowed by a 20 to 30% return rate, resulting in significant financial losses for merchants. Shoppers cited reasons such as incorrect sizing, product dissatisfaction, or simply ordering multiple items intending to return some.

The real winners are the carriers contracted to transport approximately $75 billion worth of holiday returns. And that’s only a tiny window of time. The US Department of Commerce reported that US e-commerce sales in 2023 totaled $1,118.7 billion, up 7.6% from 2022.

The ever-increasing returns led to meetings between FedEx and Amazon last year, during which they discussed a potential partnership. Learn how the talks went and what they mean for you below.

Why were these talks so surprising?

In 2019, FedEx terminated Amazon’s ground and express shipping contracts, coinciding with the online retailer building out its own delivery network. At the time, FedEx said Amazon’s business made up 1.3% of its total revenue in 2018, and analysts surmised that the profit margin was in the “very low single digits.”

Thanks to a report by The Wall Street Journal, we know that the two discussed rekindling a partnership around e-commerce returns last year. Specifically, if an agreement was reached, FedEx would accept Amazon returns at its retail locations— much like Amazon’s current arrangement with UPS.

Reportedly, these talks occurred last spring, around the same time Amazon imposed a $1 fee on customers who chose to return an item to UPS if a Whole Foods, Amazon Fresh, or Kohl’s drop-off location was closer.

How did the talks between Amazon and FedEx end?

FedEx and Amazon could not reach an agreement that would lead to a partnership, but the story doesn’t end there. The fact that the talks took place at all is indicative of the significant shifts in the dynamics of the parcel industry. As of last fall, Amazon is the biggest delivery business in the US—and yet, it still considered partnering with FedEx. And FedEx, whose actions in 2019 clearly indicated that they were after customers who offered a higher profit margin, showed up at the table.

What do the negotiations between FedEx and Amazon mean for you?

FedEx has made some drastic moves recently, including furloughing employees, encouraging pilots to take positions elsewhere, offering discounts to Walmart third-party sellers, and redesigning its air network. FedEx may not be ready to partner with Amazon yet, but the talks indicate they’re more willing to make concessions now than in 2019. Take advantage of this willingness by renegotiating your contract to secure the best rates.

ShipRx’s FedEx Contract Negotiation service frequently lowers shipping expenditures by 20-30% while securing contract terms that best match your business. We have a 100% success rate with thousands of satisfied customers. Will you be ShipRx’s next success story?

Contact us for a free, no-pressure Savings Analysis to learn how we can help you save big on shipping.

 

 

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