Why FedEx Says Amazon Can’t Compete

Can Amazon go head to head with FedEx? Not according to FedEx.

As Seeking Alpha noted on Thursday (March 17), the latter firm was less than alarmed at the thought that the online retailer could be a real threat to the three shippers that already dominate their respective industry — the hurdles are too high to vault.

During the FedEx earnings call on Wednesday, Mike Glenn, a company executive, said: “It is very clear that eCommerce is now enabling the full scale of retail revolution. There are several important trends worth noting,” he added, with the end result placing FedEx at the top of eCommerce shipping due in part to logistics and profit.

“First, referring to a specific peak day is quickly becoming a thing of the past,” Glenn said on the call. “As evidenced this year, there were multiple days where volumes exceeded 25 million packages, as consumer buying habits are changing. We view this as a positive, as Mother Nature can sometimes play havoc with last-minute eCommerce shoppers. Smoothing sales throughout peak season is a trend that will benefit retailers and transportation companies alike. We believe online shoppers will have increasing incentives to order earlier in the holiday season.”

“Second, more and more retailers are fulfilling eCommerce orders from individual stores or what we call store-to-home delivery. FedEx is well-positioned to service this growing market in the years ahead with our broad portfolio of services, including metro delivery and same-day services.”

“Third, we are seeing a significant increase in nontraditional items now being purchased online — mattresses to new swing sets and big-screen TVs, just to name a few.”

Glenn said that his firm is reducing the maximum length on shipping items to 48 inches, which fits a pallet. He also said that FedEx continues to work with Amazon, though no single customer is more than 3 percent of sales. He added that FedEx is aware of the Amazon’s need for new capacity, but that capacity would cost tens of billions of dollars and years to build enough scale to challenge the dominant players.