Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Amazon Cuts Off FedEx Ground for Prime Holiday Shipments

The move highlights the e-commerce giant’s growing power over how products get to shoppers.
Amazon Prime package | Source: Shutterstock
By
  • Bloomberg

NEW YORK, United States — Amazon.com Inc. says third-party merchants can no longer use FedEx Corp.'s ground delivery network this holiday season because it's too slow — highlighting the e-commerce giant's growing power over how products get to shoppers.

Amazon sent a message to sellers Sunday night instructing them of the change, according to notifications reviewed by Bloomberg. Some Amazon sellers complained about receiving the change less than two weeks before Christmas when holiday spending is peaking. Their alternatives include United Parcel Service Inc.’s ground service.

“It’s insane for them to do this on such short notice,” said Molson Hart, whose company Viahart sells toys on Amazon. “Unless we raise prices, we’re going to lose money on every order we are forced to route away from FedEx.”

FedEx, in an emailed statement, said Amazon’s “decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history and may compromise their ability to meet customer demands and manage their businesses.”

ADVERTISEMENT

Still, logistics expert John Haber said the company has struggled to deal with seasonal demand and has been handing off some of the load to the US Postal Service.

Couriers are under extra pressure because there are six fewer days this holiday shopping season, and package volume is forecast to grow.

Amazon’s ban on third-party shippers using FedEx follows a dispute between the two companies, which failed to renew a delivery contract.

“There’s a lot of bad blood between the two organisations,” said Haber, who runs Spend Management Experts, an Atlanta consulting firm. He said the feud will benefit UPS, which will have more bargaining power with Amazon.

FedEx shares fell about 1 percent in New York. UPS was up slightly.

More than half of all products sold on Amazon come from third-party merchants who pay Amazon commissions on each sale. Many of those merchants also pay Amazon for logistics services like warehousing and delivery, which puts Amazon in competition with FedEx. Merchants have complained to antitrust regulators that the company uses its e-commerce dominance to push them to use its logistics services.

Some merchants say that using Amazon warehouses and trucks is faster and cheaper than doing the work themselves. But Amazon increases storage fees in its warehouses during peak holiday shopping months and some merchants prefer to oversee deliveries on their own to avoid these charges.

Until now, sellers could use FedEx’s ground service during the season to meet Amazon’s pledge to deliver millions of products in one or two days. They can still use FedEx’s express service for Prime packages, but that’s a costly option.

ADVERTISEMENT

Amazon examines its delivery providers’ performance each year to determine order cut-off times for the holidays.

By Spencer Soper in Seattle, Thomas Black; Editors: Jillian Ward, Robin Ajello, Molly Schuetz

In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Analysis and advice from the front lines of the retail transformation.

What a Fashion Company Is Worth Today

In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.


What’s the Plan at H&M?

The fast fashion giant occupies a shrinking middle ground between Shein and Zara. New CEO Daniel Ervér can lay out the path forward when the company reports quarterly results this week.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections