retail news in context, analysis with attitude

by Kevin Coupe

Bloomberg has an interesting piece about the shifting fortunes and strategies in the package delivery business, which could have a real impact on retailers that use those various companies.

For one thing, "carriers like UPS and FedEx are upping their prices and imposing new restrictions." For one thing, "both companies have introduced a new $24 fee for packages that exceed 50 pounds," down from a 70-pound threshold.

A major part of the rationale for these increases is Amazon, which is developing its own delivery network, forcing companies that used to rely on it for a certain percentage of business to find new ways to drive profits. FedEx is kind of going cold turkey and has "broken ties with Amazon, realizing that the e-commerce giant is as much a competitor as it is a business reliant on its services."

What this all means, Bloomberg writes, is that "the shipping businesses operating outside of the Amazon ecosystem are being forced to rejigger their offerings to increase profits and find new logistical areas to dominate. As this war rages on, those who rely on these services - especially smaller e-commerce businesses - are consistently being bombarded with changes." And not, to be clear, changes that they will see as beneficial to their businesses.

For example, if shipping fees go up, businesses are likely to be faced with a choice. Do they continue to offer free shipping, even as it becomes more costly? How do they pass off those increased costs onto other entities? And, perhaps most importantly, how do you do all these things while competing with Amazon, which seems to be doing a pretty good job at keeping its prices in line and growing its ability to own and manage the delivery process - all things that seem designed to put its competitors at a disadvantage.

Different companies will have different responses. All of them will be Eye-Openers.
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