Tom Dougherty, CEO – Stealing Share
18 December 2019
The FedEx brand failing to deliver on its promise
Didn’t think I’d ever see this happen to the FedEx brand. But, yesterday, it announced a 40% drop in net income from the same quarter last year. That’s a whole lotta packages being delivered by someone else.
Likely related, Amazon announced this week that it would no longer allow its third party sellers to use FedEx Ground for any Prime shipments due to performance issues. While that’s good news for UPS and USPS, it’s very bad for FedEx, coming off a terrible quarter.
I still remember when the FedEx brand told you, “When it Absolutely, Positively has to be there overnight…” If you had something that needed to get there pronto, using FedEx was a no brainer. In fact, if you needed to get a package to someone the next day, and you didn’t use FedEx, it could be your job if there was a problem.
“But issues for the FedEx brand amount to more than just losing Amazon. Its drop in profits happened before Amazon pulled the plug.”
Amazon simply doesn’t need the FedEx brand
Now, with Amazon ending a portion of their relationship with FedEx, it doesn’t seem like that old slogan holds water any longer. And let’s face it, you see Amazon’s Mercedes Sprinter vans with the prime logo now all over the place doing last mile deliveries. And there are more and more Amazon distribution centers popping up all over. In short, Amazon just doesn’t need FedEx (or the other shippers) anymore.
But issues for the FedEx brand amount to more than just losing Amazon. Its drop in profits happened before Amazon pulled the plug.
One thing is certain. If a brand promises next day delivery but doesn’t deliver next day, then it loses customers. It’s as simple as that. And unlike going to a fast food joint and forgiving them for serving you cold fries, the FedEx brand doesn’t get another chance. There are now alternatives.
The FedEx brand owns a single promise – get it there fast. When it fails that brand promise, its business suffers because the promise is no longer believable.
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