FedEx have dismissed Amazon as a rival, as they pointed to the marketplace’s lack of delivery service knowledge which would be ‘needed to compete.‘
The supplier outlined their position as the leader in the delivery sector in a statement ‘regarding FedEx Corporation’s Relationship with Amazon.com, Inc.’ In a direct letter to investors, the supplier indicated how little Amazon contribute to their business margin.
“Amazon.com, Inc. is not FedEx Corporation’s largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3 percent of total FedEx revenue for the 12-month period ended December 31, 2018.”
Bearing in mind it’s the supplier’s the first time they released a statement which discloses their direct relationship with one of their customers,’ could the aim be the case of demolishing Amazon’s reputation as fulfilment provider?
The roots of the FedEx apprehension over Amazon’s taking their glory stretch back to December 2018. Morgan Stanley analyst Ravi Shanker warned that the marketplace could sap revenue from the supplier, which currently handle up to 50% of Amazon’s package volumes.
Shanker claimed Amazon Air could present a 2% fall in revenue for FedEx, rising to 10% in 2025.
“For now, investors are focusing on Amazon’s last-mile efforts but we believe the challenge in Air is just as relevant.”
-Ravi Shanker analyst Morgan Stanley
At the time of Shanker’s predictions, the share price fallen by 25% as of 23 January.
As a result of expert warnings, the supplier today downplayed Amazon’s last mile momentum in a subsequent statement given exclusively to Business Insider in what looks like a continual attempt to ‘put Amazon in their place.’
“While there has been significant media interest in what Amazon is doing to expand their in-source delivery capability, this should not be confused as competition with FedEx,” a FedEx spokesperson told Business Insider. “The global infrastructure, the technology, the capabilities and the knowledge needed to compete in our business is quite extraordinary, and we have built that up over 40-plus years.”
It appears the supplier is fearful of Amazon becoming an established logistics player, meaning they would be independent enough not to rely on the supplier. It is also focusing on defending their share price which appears to be falling with the speed of Amazon’s innovations.