|If a top-secret Amazon program comes to market, then package delivery might be the next industry to face a serious disruption.
FedEx recently posted a less-than-stellar quarterly earnings report, and now the shipping company faces a threat from their own customers. Online retail superstore Amazon is developing a new crowd-sourced delivery scheme, in which retail stores or private individuals would deliver packages on the eCommerce company’s behalf.
Internally, Amazon reportedly refers to the experimental mobile app with the code name “On My Way,” although it’s release date is unknown. The “consumer-powered” delivery service would pay retailers with physical storefronts to hold packages for customers, while also paying everyday people a fee per parcel they deliver. Currently, Amazon ships an estimated 3.5 million packages every day.
The same week Amazon’s new program was reported, FedEx Executive Vice President Mike Glenn made a statement outlining the entry challenges companies would face trying to compete in the shipping industry, like controlling transportation costs and building consumer trust. And experts say the timing of his statement was not a coincidence.
“Research has indicated time and time again that a uniformed person with proper identification showing up at your doorstep is an important issue for customers,” Glenn said in a conference call. “Consistency of customer experience is very critical in that regard.”
Although FedEx is one of the big three in the delivery industry, the company has showed signs of trouble in recent years. In 2013, FedEx revenues grew just 3.7% to $44.2 billion following revenue growth of 8.6% in 2012. The company’s latest quarterly earning report shows a loss of $895 million on total revenues of $12.1 billion.
Amazon has already experimented with paying stores like 7-Eleven to rent locker space for package pickup in their stores. And although the eCommerce giant is being tight-lipped about its new mobile app, experts say Amazon is looking towards the success of Uber and similar crowd-sourcing startups.