- FedEx trying to fill Express network capacity after not renewing Amazon contract.
- Express service not build for eCommerce, trying to find a role for it.
- Good opportunity even for smaller sellers to get discounts.
According to a Wall Street Journal article citing “people familiar with the matter”, FedEx is trying to attract online sellers with big discounts on its FedEx Express network.
The FedEx network handles mostly overnight, two-day, and three-day Express service letters and parcels and operates separately from its FedEx Ground network.
With FedEx deciding not to renew its Amazon contract next month, the company will have excess air lift capacity that it needs to fill.
However, the WSJ article also stated “FedEx is grappling with how the Express air network fits in a shipping economy increasingly dominated by online orders for everything from toothpaste to T-shirts.”
Apparently, the carrier is trying to lure shippers away from UPS by offering two-day Express service at prices that match ground rates.
This would make perfect sense as many online merchants have to compete with Amazon and other large online retailers offering free two-day delivery service.
By offering two-day Express service at a discounted rate, shippers can enter the guaranteed two-day delivery market without adding other fulfillment operations.
In a statement to the WSJ, a FedEx spokeswoman said the carrier’s pricing strategy hasn’t changed and added that the two-day Express service “has been very successful and continues to deliver tremendous value to small and medium businesses competing in the ecommerce market.”
FedEx Express discount opportunity
Sellers should not expect to see discounts on retail pricing on price tables used by marketplaces or discounts (perks) offered through affiliation with industry groups.
Typically, major discounts are part of negotiated rates which require a FedEx account sales executive to review the merchant’s shipping volume.
While discounts will vary by shipping volume, as a general rule, it is a good idea for merchants sending over 100 parcels per month to ask for negotiated rates.
If the WSJ story has legs, there could be an opportunity for mid-level shippers to gain significant discounts on Express rates with FedEx, especially if they are using a competing service such as UPS, DHL, or USPS.