Amazon has banned its third-party sellers to use the services of UPS for their deliveries to Amazon Prime clients.
Neha Malara and Lisa Baertlein reported the news for Reuters:
Amazon.com Inc (AMZN.O) is temporarily blocking third-party sellers from using FedEx Corp’s (FDX.N) ground delivery network to handle Prime shipments as it strives to hit accelerated delivery deadlines this holiday season.
This is likely to affect only a small number of sellers but “limits the options for those small businesses on some of the highest-demand shipping days in history,” a FedEx representative said.
Amazon and FedEx did not say how many packages would be affected by the restriction. Amazon declined to say how long the move would last. The Wall Street Journal earlier reported that the ban was due to FedEx’s on-time performance.
Amazon said sellers can still use FedEx’s pricier and faster Express services, including air transport, for Prime deliveries. The FedEx Ground and Home delivery options that are temporarily restricted for sellers’ Prime shipments remain available for non-Prime shipments. Third-party sellers offer more than 50% of the goods on Amazon’s site.
Amazon Prime members pay $119 per year for fast, “free” delivery.
Ahiza Garcia reported for CNN:
As of September, Amazon (AMZN) no longer uses FedEx for its own deliveries but it had allowed third-party sellers to use it. Amazon did not release a statement but will still allow merchants to use FedEx’s more expensive Express service for Prime orders and Ground for non-Prime shipments, according to Amazon.
FedEx said in a statement to CNN Business that the decision only affects a small number of shippers. But it said the move may impact these small sellers’ ability to manage their businesses by limiting their options “on some of the highest shipping days in history.”
The move comes as the holiday season — a time when more packages are shipped than at any other point of the year — hits its peak. It’s also a time when carriers face inclement weather, which can affect shipping times, and this year there are fewer days between Thanksgiving and Christmas, meaning more volume over a shorter time span.
Amazon’s focus on speeding up delivery times and its aggressive work to beef up its own shipping network threaten established shipping companies such as FedEx and UPS (UPS).
TechCrunch’s Catherine Shu wrote:
Third-party sellers now account for more than half the products sold on Amazon.com and the company’s decision on FedEx’s ground delivery comes during the peak of the holiday shopping season. Over the summer, FedEx ended partnerships with Amazon to provide it with express air deliveries and ground shipments.
An Amazon spokesperson said that the company is managing cutoffs for delivery by Christmas and want to ensure that customers receive their packages on time. TechCrunch has also contacted FedEx for comment.
Both FedEx and UPS both experienced recent shipping delays, which they said were caused by record shipping volumes and weather issues.
Amazon has also been under scrutiny by federal antitrust regulators, with some complaints centered on whether or not it forces sellers to rely on its own logistics network. The company’s focus on its warehouse and delivery services, combined with its status as the largest online retailer in the U.S., has turned it into a major competitor against FedEx, UPS and the United States Postal Service.
