There’s something big happening in the shipping and logistics world, and it’s all related to one thing: eCommerce. While retail sales plummeted and retailers in major malls had to forgo paying rent, digital retailers and online shopping surged to a new high. And it’s not just luxury items: everything from cleaning supplies to groceries can be delivered directly to your door. So FedEx made a bold move, acquiring ShopRunner, an e-retailer shipping service favored by a multitude of brands both large and small.
What does this mean for FedEx, the future of routes and delivery, and the bottom line for FedEx contractors?
Us vs. the Big Them
First, we’ll address the elephant in the room: Amazon. Still one of the largest retail giants in the world of online shipping, the company is rapidly expanding its own shipping network and logistics change. What does that mean to both shippers and other retailers?
While companies can list their products for sale on Amazon, the company takes a big chunk, it takes some ad spend on the platform to get noticed, and speculation abounds about Amazon imitation products, a monopoly on retail and shipping, and more. So more and more digital retailers are opting out of the platform.
But like 1-Click ordering, a technique Amazon patented way back when connecting to the internet sounded like putting a robot through a wood chipper, they’ve also changed customer expectations when it comes to shipping.
To compete, eCommerce will need a partner like FedEx: one with a reliable, fast infrastructure offering affordable shipping options to both consumers and businesses. And FedEx needs a simple way to connect to them. That’s what buying ShopRunner does for them. And ShopRunner becomes part of an established international shipping network.
ShopRuner and the Future of Delivery and Routes
What does this mean to the FedEx contractor and their routes? There are a couple of quick takeaways from the ShopRunner acquisition:
There will be more pickups at a variety of shippers and locations. ShopRunner allows online shoppers to choose its two-day shipping and free returns service for brands including Bloomingdale’s, Saks Fifth Avenue, and Under Armour. This means more driver pickups for these areas.
ShopRunner, like Amazon Prime, offers two-day shipping and free returns to members. Free memberships are offered through partners like American Express, PayPal, Yahoo, and others. Customers can also opt to pay $79 a year for memberships. They also “share in the success of their retail partners” a statement probably indicating something like an affiliate program, an additional source of income.
From that perspective, this also means there will be more time-sensitive deliveries available to drivers and contractors along with home pickups for returns. The focus of ShopRunner is on residential deliveries and may result in increases in FedEx Ground volume.
But in addition, the pickups offer FedEx contractors to also cross-sell other services and delivery options for non-priority packages. It’s a win-win for everyone involved.
The Bottom Line for Contractors
Owning a FedEx route is like any other business. The bottom line is profit, and any expansion FedEx does into the eCommerce space is an opportunity for route owners and drivers to increase deliveries and pickups, add more stops in their current territory, maybe even split off routes, and increase efficiency.
Of course, much of this impact will depend on where your FedEx route is located, the type of deliveries and pickups you do already. But as eCommerce increases, so does the demand put on the logistics business. At the end of the day, that’s a good thing for FedEx route owners.
Are you thinking of starting your own business? Have you considered FedEx routes, including Ground routes and even freight runs? If you think one of these routes might be a fit for you, contact us. We can help you determine what route is best for you in your area, and help you navigate the process of purchasing one.
Let us know how we can help you join the growing logistics industry.