FedEx is making an aggressive play to grab some of Amazon’s most valuable customers, as competition between the two longtime partners heats up.
FedEx Fulfillment, which the shipping giant launched on Tuesday, is an effort by FedEx to cater to the small and medium sized companies whose businesses increasingly rely on online sales.
The new FedEx service will handle the entire order fulfillment process: A company can send its products to FedEx and FedEx will handle everything from warehousing the products, packaging, delivering and even taking return orders.
FedEx Fulfillment looks almost exactly the same as Amazon’s own fulfillment program, called Fulfillment by Amazon (FBA). The biggest difference is that Amazon’s program gives the added benefit of making the sellers’ products Prime-eligible, giving more exposure to Amazon’s most prolific spenders. At the same time, FedEx’s solution serves as a good alternative to Amazon’s, as some sellers might be wary of exposing their sales numbers to Amazon when they sell through FBA.
FBA has been one of the most successful businesses at Amazon. Although it doesn’t disclose exact figures, Amazon said in its most recent earnings that FBA delivered more than two billion units on behalf of sellers in 2016. The number of active sellers using FBA grew 70% year-over-year, while FBA represented more than 55% of total third-party sales.
FedEx’s new fulfillment service also shows the complex relationship between the logistics company and Amazon. Although Amazon publicly denies it, recent press reports suggest the company is ramping up its delivery capabilities under the goal of one day replacing its shipping partners, like FedEx.