Marketplace sellers can no longer use FedEx Ground or Home shipping services for Amazon Prime. They can use the comparably expensive FedEx Express instead.
The cutoff affects small business owners who use the cheaper delivery service while still qualifying for Prime. While the overall impact on the delivery’s business is “minuscule,” the company claims the decision limits options for them.
Marketplace contractors can no longer use FedEx starting December 16.
UPS also ended their contracts with Amazon earlier this year. Alongside FedEx, the supply chain management company promised to begin shipping seven days a week.
Amazon has been building its own delivery infrastructure long before it ended its business relationship with FedEx.
Amazon Doubles Revenues
The e-commerce company is slowly approaching the same volumes as FedEx and UPS in the US. Prime delivers twice as many packages from Amazon as it did last year to about 20%.
One day deliveries affected the bump the most, but the company claims their reliability also contributed to it. Items ordered on their website come from the company’s own factories, and delivery occurs with their own trucks.
Amazon Prime Air launched in 2016 with delivery drones and cargo planes, adding more planes over the years. The company plans to expand to 70 planes by 2021.
These services pushed the company to spend 50% more in three months alone. One-day Prime shipping and company-wide expansions pulled $9.6 billion from the company.
Fortunately for the company, the risk promoted reward. Amazon Prime Air currently delivers 2.5 billion packages per year against FedEx’s 3 billion and UPS’s 4.7 billion.
Amazon Prime started increasing its volumes when it severed ties with both FedEx and UPS earlier this year. The former company’s contract expired last August after it announced declining to renew it two months prior.
FedEx Express used to transport Amazon packages by air until Amazon discontinued it with the new policy. Sellers can still offer FedEx Ground or Home for their shipping options, but Amazon’s offer will be much faster.
Prime’s Delivery Rivals, Thriving
Meanwhile, FedEx said Amazon was not a “huge customer” of the delivery service, making up only 1.3% of its total revenue. In fact, the new policy helps FedEx to expand on broader e-commerce markets.
Amazon, on the other hand, said FedEx has been “a great partner over the years” and was appreciative of their work.
FedEx recently added Extra Hours into their offerings for the platform, cutting delivery services by five to eight hours. Online orders can be delivered as soon as the next day, even when orders are placed at the break of dawn.
UPS, on the other hand, launched its prescription delivery services last November. In partnership with CVS Pharmacy and Matternet, M2 drones deliver medication to a customer’s home.
UPS Flight Forward completed the project on November 1 as the first revenue-generating medical prescription delivery.
Separate drone deliveries started last March with distances up to 12.5 miles at WakeMed Hospital in North Carolina. This drone made more than 1,500 deliveries as of November but was not allowed to deliver prescription medications.