How will Walgreens benefit from its FedEx drop-off/pickup deal?

Discussion
Photo: Getty Images
Jan 12, 2017
George Anderson

Walgreens and Fedex have announced a “long-term” agreement to have the drugstore chain’s locations serve as package drop-off and pickup destinations for FedEx. The deal calls for the two companies to begin a “small-scale rollout” this spring with expectations that the service will be available at thousands of the chain’s stores by the end of the year. The two companies are looking for the service to be available at all of the nearly 8,000 Walgreens by the fall of next year.

Walgreens and Fedex see the partnership as a means to help consumers with e-commerce deliveries and returns. Customers will be able to drop off pre-packaged and labeled shipments to Walgreens for FedEx pickup while also being able to direct the delivery of online purchases to their local drugstore.

“Walgreens, with its strong focus on customer care, is the perfect retailer to help us continue to meet the growing demand for convenient, secure drop off and pick up options, and our research has shown that customers rank pharmacies as a preferred location for accessing their e-commerce shipments,” said Raj Subramaniam, executive vice president and chief marketing and communications officer, FedEx Corporation, in a statement.

“Working with FedEx to provide safe and secure delivery locations while making it easy for customers to ship returns and other packages through the FedEx networks is another way we are becoming America’s most loved pharmacy-led health, wellbeing and beauty retailer,” said Reuben Slone, senior vice president of supply chain at Walgreens. “We look forward to providing our customers with these convenient options that will be available whenever the store is open.”

DISCUSSION QUESTIONS: Do you expect the Walgreens/FedEx drop-off and pickup program to be a success? What will Walgreens get out of the program?

Braintrust
"This looks like a win-win for Walgreens and FedEx."
"This is a very smart move for FedEx. They are leapfrogging Amazon in setting up lockers in retail outlets."
"Love the concept and the convenience factor will surely help it to win. On the other hand, It does seem to put the onus on Walgreens."

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19 Comments on "How will Walgreens benefit from its FedEx drop-off/pickup deal?"

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Mark Ryski
BrainTrust

This looks like a win-win for Walgreens and FedEx. Walgreens gets additional store traffic from FedEx customers and the opportunity to convert them into Walgreens customers; FedEx gets 8,000 new distribution points and the opportunity to expose Walgreens’ existing customers into FedEx customers. The significant and continued growth in online commerce will ensure that there is a steady stream of customers needing delivery services — this partnership makes great sense.

Shep Hyken
BrainTrust

Walgreens may be a major chain with billions in sales, but they are also a neighborhood drug store. Anything they can do to connect themselves to the “fabric of the neighborhood” is going to benefit them. Putting FedEx drop-off and pickup into the stores offers the local community another reason to shop at Walgreens. Every business needs to look for ways to be more convenient for their customers. Congratulations to Walgreens and FedEx on a smart partnership.

Debbie Hauss
BrainTrust

I think it can be a very successful partnership, especially in urban areas where consumers probably don’t want packages dropped at their front door. The challenge will be effectively staffing the locations. If consumers have to wait too long for a pickup or don’t receive high-quality communications from store or FedEx employees then both brands will lose customer confidence.

Max Goldberg
BrainTrust

The Walgreens/FedEx program should be a success for both companies. FedEx gains a partner with 8,000 locations to accept and securely deliver packages while Walgreens gains an important point of differentiation from its competitors and a reason for potential customers to come into its stores.

Meaghan Brophy
BrainTrust

It’s kind of a weird idea, but this partnership will probably increase sales for Walgreens. Customers may choose to pick up necessities at Walgreens over competitors out of pure convenience if they’re already at the store to pick up or drop off a package. However, I don’t really see how this partnership helps FedEx.

Richard J. George, Ph.D.
BrainTrust

A terrific partnership. This relationship with FedEx reinforces Walgreens’ position at “the corner of healthy and happy.” In addition, it drives customers into stores with the potential for increased sales, particularly high-margin impulse purchases. For FedEx the ability to make one stop versus multiple drop offs and pickups enhances its efficiency as well as its effectiveness.

Chris Petersen, PhD.
BrainTrust

This could be a match made in heaven.

Walgreens gets the means to drive additional traffic to stores and the potential to differentiate from CVS and competitors right across the street. I would not be surprised to see some Walgreens home deliveries coming out of this deal.

FedEx gets prime locations without have to invest in real estate. The key to lowering costs for local vans and drivers is to fill the truck with more packages. With so many Walgreens stores in major markets, this creates very profitable “backhaul” opportunities after FedEx consumer home deliveries.

Ben Ball
BrainTrust

This is a very smart move for FedEx. They are leapfrogging Amazon in setting up lockers in retail outlets. I look for this to be one of Amazon’s main ways of disintermediating their current third-party shippers. What Walgreens may not have anticipated is the operational complexity in the stores. Unless this is “self-serve lockers” they are going to find themselves with a handful in staffing this new service.

Tony Orlando
BrainTrust

It should help both businesses out and FedEx will save money consolidating their deliveries, especially in rural areas where the miles add up. Walgreens will do more business easily and the consumer also wins, as they have an easy drop-off place to ship packages.

Dan Raftery
BrainTrust

Seems like another solid step forward in their march to be the neighborhood store. Could a similar arrangement with UPS be next?

Jeff Hall
BrainTrust

I suspect this will be a terrific partnership. FedEx gains a substantially larger footprint of service availability and Walgreens benefits from the additional customer volume. Given the favorable consumer perception and equity of both brands, this program has the potential to measurably impact both bottom lines while offering broader customer convenience.

Lee Kent
BrainTrust

Love the concept and the convenience factor will surely help it to win. On the other hand, It does seem to put the onus on Walgreens. Will FedEx staff the Walgreens with package handlers? Does Walgreens have the right setup for package handling? Granted, It’s not a BIG job, but one that needs to be well thought out so as not to interfere with regular business. If Walgreens sees their lift will be more than any expense incurred in staff and set-up, then it’s a win-win.

Good luck. My 2 cents says yes to this move.

Craig Sundstrom
Guest

Mixed feelings here. Is it “whatever gets ’em in the store” or “I go there all the time anyway”? Or is it a relatively poor utilization of floor space and/or staff (as those pesky acting people are likely to ask)?

I’m not tied to either choice, but since I am one of those pesky acting people, I’m leaning toward the latter choice: Walgreens was a drug store that — like most — branched of into related lines (packaged food, housewares); this seems like a disconnect … one of those “bright ideas” from a board meeting that no one was willing to question.

Steve Montgomery
BrainTrust

Walgreens had found a good use for the space currently occupied by its photo shop. Too small for its reentry into the beer and alcohol market but certainly big enough to handle FedEx pick up and drop off.

This service may entice some of its competitors’ customers to visit their local Walgreens and with that comes the chance to convert them into a Walgreens customer. Great timing with the continued growth of “home” delivery and the customer desire for a safe place for their items to be dropped off.

William Hogben
BrainTrust

This is the same strategy as Amazon is pursuing. After grocery ecommerce peaked it was clear that people are still going to be making at least that shopping trip in person — so rather than bring grocery to ecommerce the move is to bring ecommerce to grocery. Grocery stores make excellent fulfillment centers and this will be a huge boost to both.

Min-Jee Hwang
BrainTrust

The program should be successful given proper execution. Walgreens will have to ensure proper staffing for the Fedex service and Fedex will have to adjust their network to accommodate the large increase in locations for pickup and drop-off. Walgreens will see an increase in foot traffic in their stores and FedEx will increase their reach and provide increased convenience for their customers.

NICHOLAS LEONE
Guest

“Walgreens, with its strong focus on customer care, is the perfect retailer to help us continue to meet the growing demand for convenient, secure drop off and pick up options, and our research has shown that customers rank pharmacies as a preferred location for accessing their e-commerce shipments,” said Raj Subramaniam, executive vice president and chief marketing and communications officer, FedEx Corporation, in a statement.”

The pharmacy staff will not be handling the packages. It will be the minimum wage store employee. UPS is doing alternate delivery at places like grocery stores etc.

There are plenty of horror stories about that plan. DHL was in the Walgreen stores for shipping and drop off packages. That did not work out well. My local Walgreens has only two store employees working at about 6 p.m. when
FedEx customers will be looking for packages and returning packages. They can barely take care of the customers now. And what log-in system will be used and what security will be used for picking up packages?

Christopher P. Ramey
BrainTrust

FedEx in Walgreens is a brilliant idea — if they can execute. But it’s just a start. Considering the future, Walgreens may become the largest retailer in each community where they choose to compete.

Mark Tindell
Guest
8 months 10 days ago

I don’t know what any other Walgreens stores are like but if any of the rest of them are like the one across town from me, they won’t have staff to make their customers happy. I think the success of the partnership will boil down to what we offer in my shipping store — customer service and a smiling face.

wpDiscuz
Braintrust
"This looks like a win-win for Walgreens and FedEx."
"This is a very smart move for FedEx. They are leapfrogging Amazon in setting up lockers in retail outlets."
"Love the concept and the convenience factor will surely help it to win. On the other hand, It does seem to put the onus on Walgreens."

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