Speculation is rife about whether Amazon and FedEx are teaming together and combining their expertise to tackle the ‘intensified competition’ for return logistics.
The Wall Street Journal has exclusive information about a meeting behind closed doors last year. Although three months have passed, the newspaper only received confirmation recently about the talks that “didn’t result in a deal.” Sources, however, believe it “illustrates shifts in the growing business of handling parcels that customers send back.”
Four years ago, Amazon and FedEx announced their split (2019) with reports that it wasn’t a smooth and natural decision taken by the two giant companies in e-commerce and logistics.
Both companies benefited from the business partnership for a long time, which mutually benefited both successful companies. However, the cracks surfaced when Amazon invested in its delivery services.
It’s reported that FedEx refused to renew the contract, which expired just a few months before Christmas. That put enormous pressure on the e-commerce giant to make alternative plans to get Christmas orders to customers.
Why is return/reverse logistics so expensive?
These days, customers don’t hesitate to return items purchased online if it’s not what they thought they would be. However, reversing the entire process to return it to the sender can be tricky, especially if it’s a Christmas gift that’s being returned.
Reverse logistics (also referred to as return logistics) is sending those unwanted items back into the supply chain. It’s not always just unwanted items; it could also be damaged products. The logistics behind the return of goods can be costly for a business.
Reverse Logistics Association’s Tony Sciarrotta has told Transport Topics News this aspect of transportation is vital but expensive. “In the reverse logistics world, returns go through 3-4 times as many touch points as forward goods.”
Make no mistake, there are still billions of dollars to be made of this process. According to Grand View Research, it’s a multi-billion dollar industry. In 2022, it was validated to be worth more than $ 731 billion. It’s expected to grow at a compound annual growth rate of 9.4% until 2030.
FedEx and Amazon mum on allegations
FedEx is not losing sleep over the allegations and tells Fox Business that the business meeting was quite ordinary. It used the opportunity to remind customers that they are still doing business through Seller Fulfilled Prime and Marketplace.
Amazon has, however, not said a word. The e-commerce giant uses UPS, among other courier companies, to help with their heavy delivery demand. Amazon has options allowing customers to return unwanted parcels to identified locations to ease the load and pressure.
Why Amazon is investing in return logistics
About 66% of customers who participated in PYMNTS Intelligence survey, in collaboration with Adobe, found free shipping is a dealbreaker when considering which merchant should be picked.
More than 3,500 consumers participated in the study. Nearly half of the respondents indicated they want “easy and convenient returns,” which makes them decide which product to buy from which merchant.
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About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
