- Summary:
- FedEx is looking to e-commerce to power US growth, with a new Salesforce integration adding to the mix.
As well as being 'The Great Satan' of the retail sector, Amazon has also encroached on another industry, that of logistics and delivery. The firm now delivers two-thirds of its own orders, taking away business from the likes of UPS and FedEx, the latter of which has severed its ties with the firm.
In what’s an increasingly competitive market, fuelled by the uptick in e-commerce activity triggered by the COVID crisis, FedEx has been bolstering its capabilities, last week announcing it will integrate two Salesforce offerings - Commerce Cloud and Salesforce Order Management - into its own Shoprunner solution, which directly connects shoppers with more than 100 retail brands.
Claude Russ, COO of FedEx Dataworks and CEO of ShopRunner, said:
Brands and merchants have to move quicker than ever to meet their customers’ expectations. With the combined power of Salesforce and FedEx, we will provide them the speed, control and economics they need to help them exceed those expectations. From optimizing their inventory management and fulfillment operations, to faster delivery and attracting new buyers, together we’re helping change the game so brands and merchants can have greater control over the links of their supply chain and increase their competitiveness.
As per the announcement of the multi-year relationship:
Companies can harness the power of Salesforce’s trusted Commerce Cloud, Salesforce Order Management and Einstein AI technology to quickly innovate, automate processes, and drive demand with deeply personalized digital commerce experiences at scale. With FedEx data-driven supply chain insights, comprehensive shipping network and ShopRunner e-commerce capabilities, companies can optimize and extend the post-purchase journey.
The benefits of the integration for retailers are cited as:
- Increased loyalty and customer lifetime value: access to millions of high-value shoppers actively purchasing through ShopRunner’s platform, offering Salesforce merchants a pool of loyal consumers.
- Early network insights: advanced insights to help merchants provide their customers with more precise information on when their purchases will arrive.
- Supply chain optimization: access to tools that optimize transportation and fulfillment, deepen supply chain intelligence, simplify shipping, manage costs, and take control of their business throughout the supply chain.
Meanwhile customer benefits are claimed to be:
- Two-day Shipping: the option of two-day shipping.
- Easy returns: an easy return process backed by FedEx with services like label-less returns, access to return-packaging at FedEx locations, easy drop-off and more.
- Real-time order visibility: Enhanced insights into delivery dates and times on the product detail page, in the shopping cart, and throughout the delivery journey to increase confidence and peace of mind on when orders will arrive.
The importance of e-commerce
All of this will start to appear in the US from next Spring. It follows a similar integration between Fedex and Adobe’s Magneto tech and fits neatly with the wider focus on e-commerce that the carrier has demonstrated of late. While back in 2016, CEO Fred Smith was dismissive of e-commerce, all that has changed as COO Raj Subramaniam confirmed recently.:
The e-commerce market will continue to be a growth engine globally. And if anything has become clear over the past year, it’s the contribution of our industry provides to the e-commerce value chain.
Fedex CMO Brie Carere added:
Enterprise growth in fiscal year 2022 will be primarily driven by US domestic e-commerce growth, followed by strength in B2B and international and a focus on revenue quality. In the United States, the flourishing U.S. domestic parcel market will continue to provide opportunity in the coming years. The US domestic parcel market is expected to surpass 107 million packages a day in calendar year 2022, with e-commerce contributing 88% of total US market growth.
Fedex isn’t alone in doubling down on digital tech to shore up its defences against the likes of Amazon. UPS has just announced plans to acquire Roadie, provider of a tech platform to connect retailers and customers with gig economy drivers to offer same day local delivery services. The platform matches available drivers from a pool of 200,000 verified individuals, with parcel deliveries heading in the same direction as the delivery address. The firm reckons its service covers 90% of US households. Roadie's customers include some big names, including The Home Depot, Walmart, Best Buy and Delta Air Lines.
UPS said in a statement:
Roadie often provides service for shipments not compatible with the UPS network because of their size and perishable nature, and often because they are in shopping bags without the packaging required to move through the UPS system.
Roadie’s leading technology, combined with UPS’s portfolio, will open doors for new growth opportunities. Roadie’s technology platform also will provide opportunities to improve existing, and potentially add additional, UPS small package capabilities. The Roadie technology platform is purpose-built to connect merchants and consumers with contract drivers to enable efficient and scalable same-day local delivery services nationwide.
Meanwhile DHL eCommerce, the US arm of German logistics giant Deutsche Post, plans to spend more than $300 million in facilities and automation over the next five years to expand iDHL’s growing global e-commerce business. The investment will add 70% more square footage across its US network as well as be used to upgrade its tech platforms. Lee Spratt, CEO, DHL eCommerce Solutions, Americas, said:
As our network grows and we become more efficient through automation, our customers will benefit by getting their goods quicker to their eager consumers. We are investing long-term because we believe consumers will continue to buy more online, and we will see additional online shops popping up, so we want to be prepared to meet this future demand.”
My take
A series of manoeuvres by incumbent and long-standing providers that reflect a febrile market sector going through a period of massive disruption. What happens next? More Amazon, is the safe bet. Everything else is up for grabs, but expect more drilling down on digital solutions to deliver the goods.
Image credit - Pixabay
Disclosure - At time of writing, Salesforce is a premier partner of diginomica.
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