FedEx Challenges Amazon with Homegrown Marketplace

The logistics giant will use its shipping data to power sales of third-party sellers, showing the power of customer insights and digital selling.

By Larry Walsh

In 2020, Amazon Fulfillment Services – the delivery arm of the online marketplace – surpassed FedEx in package volume processed. Now, FedEx is looking to take the fight back to Amazon by launching its own digital marketplace for consumer merchants.

fdx is a combination of FedEx’s global infrastructure and resources for processing delivery and return of products with an intelligent marketplace platform that enables sellers to use embedded intelligence to target customers. For customers, the platform offers the convenience of online shopping with real-time tracking of package deliveries and simplified return processing.

“FedEx is transforming into a digitally-led business powered by our extensive physical transportation network, leveraging our scale and insights from moving 15 million packages per day,” said FedEx Corp. President and CEO Raj Subramaniam at the National Retail Federation’s Big Show in New York. “Through fdx, we will enhance our longstanding relationships with merchants of all sizes to help them optimize and grow their businesses through digital intelligence.”

The platform is in an “invite only” preview phase. FedEx is accepting merchant applications. FedEx plans to roll out additional features and functionality to sellers and buyers in the second half of 2024.

Traditionally, third-party logistics (3PLs) operate on the periphery of the channel, providing delivery services to vendors, distributors, and partners. FedEx has operated as a staging and repair partner for some vendors. For instance, Lenovo once worked with FedEx to recover, repair, and return products through its Memphis hub to expedite warranty jobs. When video conference company Neat started up, it used UPS’s ability to hold inventory and fulfill orders from its Louisville hub as a means of bypassing traditional distribution.

Periodically, channel analysts and strategists will cite the potential for 3PLs becoming alternatives to distribution. In the Channelnomics Channel of the Future 2030 report, we predicted the 3PLs would provide distribution-like services as more vendors developed and sold products through self-hosted digital sales platforms – or first-party marketplaces.

FedEx’s move into the e-commerce marketplace aligns with its strengths in shipping data and logistics. Amazon has leveraged its deep knowledge of customer behavior and purchasing patterns to fuel its marketplace growth. While FedEx may lack specific data on the contents of packages flowing through its system, its tracking information provides significant insights into supply chains and product demand. The volume, frequency, and destinations of FedEx deliveries effectively map the flow of goods from suppliers to end consumers.

Through fdx, FedEx is clearly seeking to monetize this delivery metadata through its marketplace initiative, matching merchants to in-demand products and high-potential customers. The company is strategically positioned to apply its unique lens on e-commerce shipment patterns to digital marketplace matching services. Leveraging existing logistics data assets, FedEx aims to replicate Amazon’s success in transaction facilitation.

fdx appears focused on retail-level and consumer channels. If the initiative gains traction, it won’t take long for the FedEx marketplace to attract B2B sellers. The same thing happened with Amazon and eBay, in which the consumer platform also hosted scores of B2B resellers. In Amazon’s case, that early B2B foundation led to Amazon Business, which generated more than $22 billion in 2022 and is expected to top $44 billion by 2025, according to various sources.

Marketplaces are fast becoming a primary route to market for vendors of all stripes. Technology sales through hyperscalers such as Amazon Web Services and Microsoft Azure are expected to exceed $223 billion in 2023, according to Synergy Research Group. Product marketplaces such as could generate more than $1.7 trillion by 2027, according to Forrester. And a recent study by Gartner found that 83% of B2B buyers prefer purchasing products through marketplaces and digital platforms.

Whether FedEx can parlay its logistics strengths into a successful marketplace isn’t certain. However, the magnetic power of marketplaces to draw customers will pull more vendors, distributors, and sellers into the marketplace model.

Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide. Follow him on Twitter at @lmwalsh_CN.

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