Originally Posted by
PurpleToolBox
I do think Amazon is going to increase the B2B shipping model. It will help offset their costs -- transporting higher yielding freight along side their low yielding parcels.
I think FedEx's IT department SUCKS! The website sucks. Tracking a package is still a difficult process. The app sucks too. It definitely isn't going to attract the millennial generation's or their kids attention.
I live in Memphis. Starting in the early morning I see two or three Amazon trucks in my neighborhood. And there are trucks delivering all day and into the night. *Rarely* do I see a FedEx truck. However, as Fred states, eCommerce is only 12% of our business. So home deliveries aren't a majority of the FedEx portfolio.
What do you reinvent FedEx into? You seem to believe that FedEx can't create a marketplace. I think FedEx can and must in order to survive Amazon's wrath. The incentive to go with FedEx's marketplace is that you keep your business data out of the prying eyes of Amazon. Amazon sees what you are selling and then undercuts you. You are damned if you do and damned if you don't. FedEx already has relationships with thousands of businesses which could prove useful in building the marketplace.
This FedEx bot IMO will be a huge fail. Perhaps it was a publicity stunt to keep the brand name in the news?
The problem with Amazon is that they're paying extremely low rates to transport those goods. They've already caused a couple of trucking companies to go out of business who signed onto their low paying contracts. This could be a benefit to UPS/FDX or what causes our yields to fall.
Great points and an awesome conversation on this topic!
I completely agree with you that Fedex's IT department is deplorable. That's a topic for another day! During INDOC they were introducing the system that is used to calculate the TOLD info using the Toughbook. I asked why we were not using third party applications through ACARS like other airlines. The answer was it was created internally and if we did use third party systems they and their team members would probably be out of jobs. Sounded like the way the government does business to me.
When it comes to IT solutions Amazon is incredible. Amazon Web Solutions (AWS) is an important part of their business. AWS is a growing and very profitable part of their business it's also one of their key strategies in developing their B2B partnerships. Fedex historically with a fledgeling IT department would have to reinvent itself in order to be a serious contender in the online space. It's hard enough for them to keep their network up so everyone can print their flight plans and paperwork imagine trying to keep up with an amazon type marketplace it's deliveries and everything it has going on now. Its possible but would require an overhaul on how it does business.
As mentioned they would then have to attract the masses and convince them that Fedex is more than just a shipping company it's now their marketplace. A lot of money and effort would have to be spent to rebrand Fedex or a new named company operating as a subsidiary to convince the millions of monthly paying prime members to jump ship.
"The problem with Amazon is that they're paying extremely low rates to transport those goods"
The low cost problem is one that is very interesting and worth noting. Do yourself a favor if you haven't yet, during busy periods of time hang out at the sort facility at MEM and watch as people are still hand scanning packages, throwing packages back on the conveyer belts as they fall off and start piling up as meager paid and apathetic workers try and keep the machine going. Packages are lost, misplaced and destroyed in the process it's a miracle it all comes together enough to keep the business going. Pay attention at how archaic some of these outstations and sort facilities are.
Amazon has invented some of the most technologically advanced sorting and logistic solutions. Their IT department was built around autonomous operational sorting efficiencies.They depend less on manpower and more on automation. They have the advantage of building every new facility and outstation using the latest technology while pilots at Fedex often struggle to print out their flight plans at times. What does this mean long term? As a result of their technology and efficiencies they have the ability to offer rock bottom prices long enough to choke out their competitors and still make a profit.
Everyone knows they have issues with treating employees well and part of that has to do with their cut throat cost savings. If they wanted to act like a low cost carrier in the logistics world to hurt their competitors they could.
They can also easily fix their problems of not competing with their partner businesses in the marketplace and provide more privacy along the way.