Will FedEx’s ShopRunner deal give retailers a better shot against Amazon?
FedEx last week announced that it had agreed to acquire ShopRunner, the Prime-like subscription service that offers two-day delivery from more than 100 retailers. The service is seen as an alternative that may be able to combat Amazon’s growing market share and its third-party fulfillment ambitions.
ShopRunner’s $79 yearly membership also includes free returns, member discounts and seamless checkout. Merchants in the program include American Eagle Outfitters, Saks and Under Armour.
ShopRunner’s data-driven marketing and omnichannel capabilities help participating companies “acquire high-value customers and accelerate their digital innovation,” according to FedEx’s statement.
Once the deal is closed, according to the press statement, “the complementary nature of ShopRunner’s pre-purchase offerings combined with FedEx post-purchase logistics intelligence will enable merchants to attract and engage consumers at scale.”
Pandemic-related logjams are believed to have delayed Amazon’s entry into third-party fulfillment. But with ramped up hires and investments to meet surging online demand, Amazon’s delivery network promises to be a formidable competitor to UPS and FedEx post-pandemic.
UPS has been more aggressive than FedEx in partnering with third-party platforms, including Spotify, to better compete with a potential one-stop selling solution from Amazon.
The ShopRunner purchase builds on FedEx’s recent moves to enhance its e-commerce platform. These include ending its ground delivery contract with Amazon last August to position itself as the go-to option for other retailers, as well as the expansion of ground delivery to seven days a week and a BigCommerce e-commerce platform partnership.
“It’s an interesting move as FedEx continues to build out capabilities outside of moving packages from A to B,” Matt Weickert, a Shipware consultant, told Multichannel Merchant. “In this case, they’ve acquired ShopRunner’s marketing and omnichannel enablement. Basically, they’re purchasing data and ecommerce market insights with this acquisition.”
Others questioned the rationale behind the deal, considering that delivery priority is shifting to next-day. Shopify and on-demand delivery platforms are also looming as bigger competitors for the last mile.
“If you are competing with platforms like Uber and DoorDash and all of these people that have digital money behind them … trying to compete in a digital marketplace with an analog P&L is very difficult,” Bryan Gildenberg, SVP of commerce at Omnicom Retail Group, told Modern Retail.
- FedEx to Acquire ShopRunner to Expand E-Commerce Capabilities – FedEx
- ShopRunner to be Acquired By FedEx – Multichannel Merchant
- ‘Playing catch-up’: Why FedEx and other carriers are striking deeper partnerships with platforms – Modern Retail
- FedEx plans to buy ecommerce shipping service ShopRunner – Bloomberg
- FedEx delivers message to Amazon with ShopRunner acquisition – Pugent Sound Business Journal
- Is FedEx smart to say goodbye to Amazon’s U.S. business? – RetailWire
- Why is Amazon banning FedEx ground delivery? – RetailWire
- Pushed by Pandemic, Amazon Goes on a Hiring Spree Without Equal – The New York Times
DISCUSSION QUESTIONS: What do you think is behind FedEx’s deal to acquire ShopRunner, and will it attract more merchants competing with Amazon to the program? How do you see the battle over retail’s last-mile shaking out over the next few years?