A holiday skirmish has broken out between Amazon.com Inc. (NASDAQ:AMZN) and FedEx Corp (NYSE"FDX)
Amazon has notified third-party merchants that they can no longer use FedEx Corp.’s ground delivery network this holiday season because it’s too slow. The move highlights the e-commerce giant’s growing power over how products get to shoppers.
Amazon sent a message to sellers instructing them of the change. Some Amazon sellers complained about receiving the change less than two weeks before Christmas when holiday spending is at its peak.
For its part, FedEx, in an emailed statement, said Amazon’s "decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history and may compromise their ability to meet customer demands and manage their businesses."
Amazon’s ban on third-party shippers using FedEx comes after a dispute between the two companies failed to renew a delivery contract. FedEx shares fell about 1% in New York trading on the news. Shares of UPS rose slightly.
More than half of all products sold on Amazon come from third-party merchants who pay Amazon commissions on each sale. Many of those merchants also pay Amazon for logistics services like warehousing and delivery, which puts Amazon in competition with FedEx. Merchants have complained to antitrust regulators that the company uses its e-commerce dominance to push them to use its logistics services.
Until now, sellers could use FedEx’s ground service during the season to meet Amazon’s pledge to deliver millions of products in one or two days. They can still use FedEx’s express service for Prime packages, but that’s an expensive option.
