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How Will FedEx Fulfillment Affect FBA and Ecommerce Market?



FedEx recently announced that they will offer ecommerce fulfillment services to small to medium size businesses that will help them to store their products, and integrate with marketplaces such as Amazon, ebay, bigcommerce etc so e-commerce sellers may outsource their shipping and storage needs. This is another sign that ecommerce businesses will grow and retail businesses will have a hard time. Even Macys is currently closing 100 stores around the country.

I believe that this is great news as FedEx will provide big competition to Amazon's FBA service. Even though Amazon provides very low shipping prices and puts priority for prime items, FedEx will actually help tons of sellers to provide better pricing on other marketplaces.

Here is my thought how this can affect the ecommerce businesses:

  • Amazon may reduce their outrageous long term storage fees. Most international sellers may switch to FedEx to avoid these high fees. Amazon punished sellers with high long term storage fees $11.25 per cubic foot after 6 months and it goes up to $22.50 after 1 year. So having a big competitor can push Amazon to reduce their pricing.They may not change it but if they don't then I believe that would help FedEx to gain many Amazon Sellers.

  • Multichannel sellers will probably be able to offer better pricing with FedEx and more shipping options such as second day or next day. It may also be good for sellers who do merchant fulfilled prime. Amazon gets huge discounts from carriers but it only passes on that discount if you sell your products to Amazon customers. If you try to use Amazon to fulfill non-amazon orders, prices are higher, especially if you receive multiple items then the prices are getting very expensive. I believe with FedEx fulfillment even small sellers will be able to offer even lower prices on other marketplaces and Amazon will start seeing big competition from ebay, jet, walmart, newegg, etc.

  • Even though we don't know how FedEx will charge online retailers for their services, they are going to offer custom packaging or plain packaging so this will be a huge advantage for them since Amazon stopped offering brand-free packaging last year.

  • If FedEx comes with a great software that may help people to integrate directly with certain marketplaces and webstores, this may have a huge affect on ecommerce software providers because it will be the only service that will provide storage, shipping, and multi-channel integration.Other than software providers I believe fulfillment companies will have a hard time competing directly with them so I am sure they are not happy to see FedEx is coming into their field. If FedEx can do an all in one solution like I mentioned above, this may be a game changer in the industry.

Conclusion:

It's good to see big sharks are competing because this will probably benefit small businesses. It will help small businesses to lower their storage and shipping costs and will give them more time to focus on marketing and sourcing. Who knows if UPS jumps in and comes up with UPS fulfillment centers. More is always better than one. So let's wait and see how this will have an impact on the ecommerce industry. I will provide more details as soon as FedEx Fulfillment Services becomes available or announces more details about their services.

Good luck & Thanks for reading!

#FedEx #fulfillmentservices #fba #ecommerce

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