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FedEx launches late-night shipping service for US retailers

FedEx launches late-night shipping service for US retailers article image

FedEx Corp has launched a late-night shipping service for retailers who want to expedite orders to online customers.

The program will offer retailers the option to deliver items the next day when they are purchased online as late as midnight, said Brie Carere, FedEx’s chief marketing officer in the US.

Ms Carere told Bloomberg the new service would help retailers to compete against e-commerce giant Amazon.

Less than 1.3 percent of the courier’s total revenue comes from Amazon, she said – a figure that hasn’t previously been disclosed.

FedEx doesn’t expect that to increase and it sees better prospects in helping customers compete against the e-retailing behemoth.

“We are not dependent on Amazon for growth,” Ms Carere said. “We’re very optimistic and very, very confident in the growth of the market outside of Amazon.”

FedEx sees US$550bn in potential sales in the global markets they’re targeting.

Package couriers face a rising threat from Amazon – which is also one of their biggest customers – as the online giant expands its own delivery capabilities.

Boom in online sales

In the US, Amazon has begun leasing aircraft and hiring independent contractors to establish a ground-delivery network.

Online sales now make up about 15 percent of US retail and are growing at three times the pace of traditional brick-and-mortar.

FedEx sees potential profit in the competitive pressure online stores face in keeping up with Amazon’s drive to reduce delivery times on purchases.

Ms Carere told Bloomberg about half of online purchases occur after 4pm.

FedEx’s new extended-hours service aims to help retailers to meet those demands.

Under the program, FedEx Express drivers will pick up packages as late as 2 am from retail stores and take them to sorting hubs. Deliveries can happen as soon as the next day within the local market, and within two days for destinations elsewhere in the US.

FedEx began testing the idea in Los Angeles and Dallas in late 2017 and has since rolled it out to 100 markets. The service hasn’t required additional investment or setting up new routes, Ms Carere said.

US market growth

FedEx expects the US market to jump to 100 million packages a day by 2025, up from 44 million last year. About a quarter of those will be local deliveries.

So far, retailers in the program have offered overnight deliveries without requiring a subscription or charging an annual membership fee, Ms Carere said.

Will FedEx in Australia follow suit and introduce late-night shipping?

At FedEx, we are always exploring opportunities to help customers grow their business by introducing services to meet their changing needs,” a company spokesperson said. 

“Currently, this service is only available in the US.”

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