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FedEx Packages An E-Commerce Deal

FedEx has agreed to buy Genco, a company that specializes in returning the products that FedEx already works to deliver, Bloomberg reported.

This acquisition moved FedEx's mission further into the e-Commerce realm as its already the operator of the world's largest delivery system. Why not be the provider to return those packages back? No terms were released about the deal but Bloomberg reported that FedEx said Genco's annual sale were around $1.6 billion and has more than 11,000 employees.

“With the growth of e-commerce there are more returns,” Satish Jindel, president of SJ Consulting Group Inc., told Bloomberg.“That is likely to help the growth of this company.” He estimated FedEx paid about $2 billion for Genco. This announcement from FedEx came during the company's busiest season as it prepares to tackle the holiday rush. According to Bloomberg, deliveries were forecast to have peaked this year at 22.6 million.

"As e-commerce continues to grow, customers of both companies will reap the benefits from the broadened capabilities and powerful new services,” FedEx Chief Executive Officer Fred Smith said a company statement. Management of Genco, currently ran by CEO Todd Peters, will not change after the transaction closes sometime in 2015.

FedEx's move to take over Genco shows a push to get more involved in the e-Commerce process. One a package is shipped through FedEx, it now has the ability to offer customers the same service to send the product back. The benefits of delivery have come full circle for FedEx and this move positions the company to have more of a presence in and outside the U.S.

"With Genco, FedEx will be able to offer its customers the package return service as well as delivery. FedEx also can ship returned goods to markets where it sells at a higher price, Jindel said. “Some of this returned merchandise has a better value proposition being sold in China and India and Latin America.”

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