FedEx Stops Ground Deliveries for Amazon, Signaling Delivery War to Come
FedEx announced that it will no longer make ground deliveries for Amazon. The delivery giant had announced two months prior that it would no longer execute air deliveries for the e-commerce giant that eats up half of online purchases.
FedEx said it is no longer working with Amazon so that it can make more deliveries for e-commerce companies. That’s evidence of a symbiotic relationship between Amazon’s long-time competitors in retail like Walmart and Target and FedEx, the rival Amazon has created as it seeks to take control of yet another industry adjacent to its core retail business.
Walmart and Target will have plenty of packages for FedEx to deliver. Those companies have realized in the past few years that their fates hinge on investing aggressively in cutting-edge technology, especially e-commerce. Walmart’s onboarding of Jet.com founder Marc Lore and acquisition of Lore’s company have made it a clear number-two player in the e-commerce space. Target and others have followed suit.
For FedEx as for the many other companies and industries Amazon has decimated over the past 20 years, the problem in confronting Amazon may turn out to be one of margins. While FedEx needs a profitable delivery business to survive, Amazon can afford to lose money on delivery and make it up with relatively free-flowing profits from Amazon Web Services and its booming ad business.
In fact, Amazon can afford, thanks to the faith and generosity of investors, to make no profits at all. No easy task, competing with that.