Friday, July 19, 2013

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New e-commerce strategies of major retailers threaten UPS, FedEx

Major U.S. retailers are floating new e-commerce strategies that could decrease demand for package delivery services, especially over long distances, according to analysts and industry executives.

Amazon is building distribution warehouses closer to customers to save millions of dollars in shipping costs. The world's largest online retailer is also using its own delivery trucks more and more, deleting UPS and FedEx from some parts of its shipping network.

Major brick-and-mortar retailers such as Wal-Mart Stores, Best Buy and The Gap are shipping more online orders from their stores in close proximity to online shoppers, rather than from warehouses located states away.

"UPS and FedEx are not only watching this, they are likely concerned about it," said Lou Tapper, an executive at third-party logistics company Longistics, who worked at FedEx for 18 years. "Big companies like Amazon and Wal-Mart will dictate which direction this goes. Those are the companies that FedEx and UPS need to fill their planes and trucks."

For more of the Reuters story:

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