FedEx unveils plans that could help it outcompete rival Amazon in 2021
Category: #retail  By Saipriya Iyer  Date: 2019-12-23
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FedEx unveils plans that could help it outcompete rival Amazon in 2021

FedEx Corporation, an American multinational courier delivery services company, reportedly stated the company will start lapping Amazon in 2021.

FedEx’s rough relation with Amazon might have added to its second quarter fiscal earnings slump, however the shipping company stated that it could really turn a corner and beat its competitor in fiscal year 2021.

Alan B. Graf Jr., CFO, FedEx, reportedly stated that the company would start lapping Amazon. The company is at the bottom and is going to improve this year and the coming year. Graf further stated that the company had spent heavily on its ground delivery service to run seven days a week throughout the year. These investments coupled with operational synergies across Europe would start to pay off in fiscal 2021.

Recently, FedEx recorded a weaker than usual fiscal second quarter (Q2) revenues and brought down its entire year earnings outlook for 2020. The company’s share has slid to 10%. The stock is also down to about 9% year to date and the company has lost more than 4 billion in market value.

 

The company attributed the discouraging quarterly results on weak global economic conditions, rising expenses related with expansion of ground delivery, online holiday sales moving to the third quarter and loss of business from a huge client, which was later confirmed to be Amazon.

Graf stated that the volume loss from Amazon resulted in a negative impact to the second quarter that was bigger than the first quarter as the FedEx ground contract with Amazon lapsed in August.

FedEx revealed plans to end its ground-delivery contract with Amazon in August. The company also stopped its express U.S. shipping contract with Amazon in June. Furthermore, Amazon fired back by reporting that it will temporarily stop third-party vendors, who account for 58% of its total merchandise sales, from using home delivery services and FedEx’s ground as well as home delivery for Prime orders.

Amazon stated that the decision was made based on poor delivery performance by FedEx and to ensure that the shoppers receive their packages on time for Christmas. The company had not yet specified when it would be resuming the services.

For vendors, this move threatens to throw most of their businesses into a panic situation during the year’s busiest shopping period. Vendors are forced to find a new delivery service and are likely to face a high upfront cost.

The spat between FedEx and Amazon has heated up in the past year. Amazon has now distanced itself from UPS and FedEx by building their own delivery network.

Source credit: https://www.cnbc.com/2019/12/18/fedex-says-it-will-start-lapping-amazon-in-2021.html



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Saipriya Iyer

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Saipriya Iyer

Saipriya Iyer develops content for Market Size Forecasters, Algosonline, and myriad other platforms. A computer engineer by profession, she ventured into the field of writing for the love of playing with words. Having had a previous experience of 3 years under her bel...

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