FedEx deepens its ecommerce offerings
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FedEx deepens its ecommerce offerings

Global shipping giant FedEx made a big announcement last week: it’s planning to launch a new service, FedEx Fulfillment, as a logistics network for small and medium-sized businesses. This is a compelling proposition for businesses who want to get into ecommerce, a direct challenge to Amazon, and one of the factors that may push FedEx’s year-long rally even further into 2017.

FedEx has risen nearly 50% over the last 12 months

fed ex ecommerce

SOURCE: Yahoo Finance

Basically, if you run a business selling products online, you will soon be able to store your stuff in FedEx warehouses (it has roughly 130 in the U.S. and Canada), and have them deliver it as soon as it’s ordered. This means your goods will be delivered quicker, more professionally, and in standardized packing. FedEx is a trusted brand, so it should also give your customers confidence that the shipping and packaging is being handled well.

This is a big deal, because delivery times can make-or-break sales. It also puts FedEx in competition with Amazon.

Since 2000, Amazon has let people store the goods they sell on its platform in its warehouses. It’s dealt with orders, payments and shipping. This is a useful service, but it’s one that ultimately benefits Amazon. The company gets to see what’s selling, rejig its prices accordingly, and keep its finger firmly on the consumerist pulse.

So, if you’ve got a sales platform and customer-base already, FedEx might be about to poach you from Amazon. That’s the U.S.

Meanwhile, in Europe, analysts are still looking forward to the merger of FedEx and TNT. Raymond James analyst Patrick Tyler Brown wrote a note to clients last week, saying:

"We continue to believe that adding TNT into FDX's portfolio will prove a game changer for FDX as TNT should improve FDX's European operations providing not only cost synergies (via density), but also revenue opportunities over time."

Taken together, these pieces of news could point to the extension of a rally in FedEx that has gone on for 12 months and already delivered investors almost 50%.

Disclosure
Dominion holds FedEx in its Global Trends Ecommerce Fund


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