Internet giant Amazon is doing an about-face on its earlier ban and will now let third-party vendors using its marketplace ship items using FedEx.
The company lifted its ban as of 5pm eastern time yesterday, reports Bloomberg, which obtained a copy of the email Amazon sent to sellers.
Amazon in December abruptly prohibited third-party vendors on its website from using FedEx ground delivery services. In a communication to third-party merchants sent at the time, Amazon said the ban on FedEx Ground and Home services would persist “until the delivery performance of these ship methods improves.”
Whether FedEx has gotten better or Amazon simply doesn’t care anymore now that the busy holiday season is over is an open question. “The number of items delivered with Prime free one-day and Prime free same-day delivery nearly quadrupled” in the 2019 holiday shopping season, Amazon bragged in a December 26 press release, adding that its in-house logistics business delivered more than 3.5 billion packages in 2019.
What Amazon did not mention in its seasonal round-up was that vendors have accused the company of strong-arming them into using its in-house logistics service, occasionally to their own detriment. At least one merchant using the Amazon platform complained to Congress that Amazon’s behavior is anticompetitive.
“Merchants using Amazon logistics services aren’t penalized when customer orders arrive late, even though they frequently do, since that’s Amazon’s responsibility. Those who handle their own logistics face stiff penalties for even minor delivery mishaps, including being suspended from selling on the platform,” the vendor alleged. Meanwhile, the merchant said, fees for using Amazon logistics have increased by 20% over the past four years and now cost as much as 35% more than competing services. Vendors are forced into paying the higher fees and using Amazon anyway, the complaint said, because Amazon promotes discovery for products it can mark as “fulfilled by Amazon” and demotes those that are not.
The relationship between FedEx and Amazon was soured long before the Christmas ban. FedEx did not renew its air shipping contract with Amazon when that agreement expired in June, and it ended its ground shipping agreement with Amazon in August.
Since Amazon launched its Prime-branded delivery service in 2016, the operation has grown at a staggering pace. Analytics firm Rakuten Intelligence reported in July that Amazon handles about half of all last-mile shipments on its own. By Rakuten’s reckoning, Amazon’s 90,000 logistics employees have 50 planes, 300 freight trucks, and 20,000 local delivery vans at their disposal—an estimate that may not even include all the rented vans and personnel working for the sprawling network of third-party contractors that handle the bulk of Prime deliveries.