In a world where people are increasingly choosing online shopping over brick and mortar, taking weekends off is no longer possible. This is not only true for retailers but, increasingly, shipping companies as well.
In what has been seen as a bombshell announcement, FedEx now says it will be offering 7-days-a-week shipping.
What’s truly impressive is the speed in which FedEx has decided to implement this change – by January 2020 – well before its main rival, UPS.
USPS, however, has been offering limited Sunday shipping for some time.
eCommerce is the Driving Force
eCommerce has fueled a windfall for FedEx, as well as its competitors such as UPS. Having only recently expanded to include Saturday shipping, FedEx is quickly realizing that in order to fully capture this explosive market there can be no breaks. Interestingly, after the recent expansion to 6 days a week, FedEx cut its profit outlook. It’s clear that FedEx is taking a short term loss in the hopes of a longer-term gain.
And they may be right.
FedEx’s biggest rival, UPS, has not made the same move – they currently offer 6-days-a-week shipping. Therefore, FedEx is positioned to be the greatest beneficiary of the eCommerce boom. While USPS does Sunday deliveries, it’s only on a limited scale. There is, however, consideration within USPS to expand to full 7-days-a-week shipping.
Outsourcing to USPS No More
Companies have generally looked to outsource last-mile home deliveries, especially to USPS. The reason is that, historically, the profit margins were not favorable. However, eCommerce shopping has increased the volume of those deliveries to the point where executing those deliveries has become financially desirable.
FedEx plans to retain the vast majority of SmartPost packages – 80% of which are currently delivered by other services, such as USPS – in its own network in the coming year.
One of the biggest drivers of the need for expanded shipping is one-day and two-day shipping – particularly via Amazon.
Amazon has recently announced that over 10 million items are now available for one-day shipping. The rapid increase in one-day and two-day shipping has put incredible pressure on companies like FedEx, UPS, and USPS to expand their offerings in a way that they were unwilling to do previously.
While Amazon is the biggest driver, other retailers are following suite – which places even more pressure on shipping companies.