FedEx Corp. is retrenching from carrying out last-mile delivery for e-commerce sellers because the economics don’t add up for a company built on global, end-to-end logistics, but that doesn’t mean it wants to cede the ground to independent couriers and retailers.
On Tuesday, the company announced it will provide merchants with same-day, local delivery, but outsource the house call to OneRail, a platform for sourcing final-mile couriers. The product aims to meet rising consumer expectations for flexibility, control and convenience at a price point that is cheaper than FedEx (NYSE: FDX) can offer if it makes local deliveries.
The OneRail partnership allows FedEx to gain small parcel volume in the same-day delivery space increasingly occupied by Amazon, Walmart, DoorDash, Instacart and others, said parcel consultant Nate Skiver on LinkedIn. And FedEx can now begin to match UPS, which offers same-day delivery through its Roadie subsidiary and Delivery Solutions, a similar platform to OneRail by which retailers can access a network of providers for on-demand delivery, he said.
“Now, maybe, FedEx can claw some of that volume back. And/or win new volume from existing large customers like Best Buy, Walgreens, Dick’s, GameStop, PetSmart, etc,” said Skiver, the head of LPF Spend Management.
He stressed that FedEx needs to be competitive on price or retailers will have little incentive to make the change.
OneRail CEO Bill Catania said in a LinkedIn post that the solution is white-labeled, enabling FedEx merchants to deliver a fully branded experience to their customers, while maintaining complete control of their customer relationship, data, and brand.
“At FedEx, we’re supporting our customers in pushing the boundaries of their value proposition around speed and convenience,” said Jason Brenner, senior vice president, digital portfolio at FedEx, in a news release. “FedEx SameDay Local will provide our customers with a scaled solution to give the delivery options customers want, without adding complexity to their operations.”
FedEx SameDay Local will let shoppers choose two-hour or end-of-day delivery directly at checkout. The service will connect FedEx customers to a national network of more than 1,000 delivery providers, coordinated through OneRail’s integrated technology system. OneRail provides the infrastructure for shippers to find and use alternative carriers nationwide, essentially creating a virtual network with hundreds of carriers, allowing customers to monitor performance and adjust volumes to balance for cost and quality. Orders are then automatically matched to the appropriate vehicle and driver, dispatched quickly, tracked with live updates and predictive estimated time of arrival from pickup to delivery, and come with proof of delivery FedEx said.
OneRail says it has access to 12 million on-demand car and truck drivers.
The last leg of parcel delivery typically accounts for about 52% of delivery costs because there are many inefficiencies in matching up enough drivers with shipments at the right time and place.
Nearly half of shoppers are more likely to complete a purchase when same-day delivery is available, according to Invesp.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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