Amazon has a huge advantage over its rivals that is almost impossible to duplicate. The retail giant has an incredible level of infrastructure that would cost tens of billions of dollars to copy.
It's a huge gap that only Walmart has really come close to matching. No new player can start from scratch to match Amazon. (AMZN) – Get a free report network of warehouses, distribution centers and its delivery fleet.
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That's what's kept Shopify from becoming a major player, and it's why Target had to be smart about competing by buying send. That move, which gave the company its own same-day delivery capability, gave the brick-and-mortar chain a way to leverage its nationwide store presence.
Basically, any company that wants to compete with Amazon cannot start from scratch. Walmart (WMT) – Get a free reportSpain, for example, already had stores within a few miles of 90% of Americans, and has still had to invest billions to stay even close to its rival.
Hands (K.R.) – Get a free report could be more competitive with Amazon in the grocery sector when (or if) it completes its merger with Albertsons (ACI) – Get a free report, but still it will not be a true national rival. Amazon simply has a scale of infrastructure that is almost impossible to match because it has consistently invested billions in building its capabilities.
To compete, a company would need to start with a huge base, and that's something only a handful of players have. However, one of those companies, which Amazon abandoned in the past, has the infrastructure and has decided to take down the retail Goliath.
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FedEx wants to take on Amazon
In 2019, FedEx (FDX) – Get a free report made the decision to stop doing business with Amazon. That was a big preemptive “no, I'm breaking up with you” move because, in reality, the online retail giant had been building its own fleet of last-mile delivery vans as well as a fleet of planes to take control of its own delivery infrastructure.
Building its delivery system was part of a massive decision to spend billions of dollars to build an infrastructure moat that few companies could match.
You could argue that Walmart has kept pace, but the Bentonville behemoth may be the only retailer that controls its own shipping and deliveries to customers the same way Amazon does.
Building a similar network from scratch would take years and tens of billions of dollars. That's a painful lesson Shopify (TRADE) – shop“>Get a free report learned while trying to become a rival to Amazon by serving as a logistics partner for its customers.
FedEx, however, already has the necessary nationwide and last-mile delivery infrastructure. Now, the shipping giant has shared plans to offer its retail customers access to an e-commerce platform that would be supported by the company's infrastructure.
FedEx has the infrastructure
When FedEx bought ShopRunner, an online e-commerce marketplace in 2020, the company was unclear about its intentions for the brand. It has now shared that it intends to integrate its functions into a new e-commerce platform.
“This fall, FedEx is revolutionizing the world of e-commerce with a new data-driven platform called 'fdx.' Designed to provide online merchants with top-to-bottom e-commerce solutions, this innovative project is set to revolutionize the sphere of supply chain management. Retail Cable reported.
The new platform will leverage FedEx's delivery capabilities along with ShopRunner's technology.
“Online sellers, for example, will be able to provide customers with estimated delivery times during the purchasing process. Other features will inform them about the carbon footprint of their supply chain resources and help them 'streamline, configure and manage returns,” he says. website added.
The new platform was launched on January 14 at NRF 2024: Retail's Big Show by FedEx CEO Raj Subramaniam.
“FedEx is transforming into a digital business powered by our extensive physical transportation network, leveraging our scale and knowledge of moving 15 million packages per day. Through fdx, we will enhance our long-standing relationships with merchants of all sizes to help them optimize and grow their businesses through digital intelligence,” he said.
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