Amazon has informed third-party Marketplace sellers who use its platform that they may no longer use FedEx Ground or Home shipping services if they’re listing products for Prime, just as holiday package volume begins surging in most of the US. Amazon is reportedly taking issue with FedEx “delivery performance,” according to The Wall Street Journal. Amazon has confirmed to The Verge it is indeed blocking sellers from using FedEx for Prime products.
Amazon is advising sellers use the more expensive FedEx Express to fulfill Prime orders, or remove the Prime label from products. Alternatively, sellers may offer FedEx Ground or Home from the purchasable shipping options. Amazon has not given a timeline for when it plans to resume letting Marketplace sellers use all of FedEx’s available shipping options for Prime orders. Marketplace now represents more than half of all retail sales for Amazon’s entire e-commerce business.
Amazon is now competing more directly with FedEx and UPS
According to the WSJ, FedEx says the cutoff affects only a small number of Marketplace sellers, but it disproportionately affects small business owners who use FedEx’s cheaper options to ship more units and still qualify for Prime. FedEx says Amazon’s decision limits the options for those small businesses on some of the highest shipping days in history,” a company spokesperson told WSJ.
FedEx said the decision impacts a small number of shippers but “limits the options for those small businesses on some of the highest shipping days in history.” The carrier said it still expects to handle a record number of packages this holiday season. “The overall impact to our business is minuscule,” a FedEx spokeswoman said.
Amazon and FedEx ended their business relationship earlier this year, when FedEx first declined to renew its FedEx Express contract with Amazon for air shipments in June and then ended its ground shipping contract two months later. Amazon now exclusively uses UPS or its own Flex delivery network, as well as a series of third-party contractors. But Amazon has still permitted Marketplace sellers to use FedEx, until today’s policy change.
Amazon has for years now been building out its own delivery infrastructure, so it can eventually cut costs by owning every part of the delivery chain. In its last quarter, Amazon spent $9.6 billion on fulfillment, in part to support one-day Prime shipping. The company is now approaching the package volume of both FedEx and UPS in the US and is on pace to surpass both.