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Amazon Bans FedEx's Ground Network Usage for Prime Deliveries
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Amazon (AMZN - Free Report) has temporarily suspended the usage of FedEx’s (FDX - Free Report) ground delivery network for its Prime shipments, which require deliveries at ultrafast speed.
Notably, the company is of the opinion that the network is slow and needs to speed up. In fact, despite the flurry of holiday orders and shipments, Amazon will not lift the suspension until the network speeds up.
The latest move reflects the tensions between Amazon and FedEx. Notably, the latter did not renew the delivery contract this year following Amazon’s decision to speed up the Prime shipment from two days to one day.
Nevertheless, the e-commerce giant has kept the option of FedEx's faster Express services including air transport open for Prime deliveries to the third-party sellers who are now barred from using FedEx ground services.
However, the third-party sellers have the alternative option of utilizing United Parcel Service’s (UPS - Free Report) ground service. Moreover, the third-party sellers can still use FedEx ground services for non-Prime deliveries.
Consequences of the Move
Interests of the third-party sellers, who account for more than half the products sold on Amazon’s e-commerce site, are likely to be affected. This is because they will have to shift to pricier alternatives for faster deliveries during the peak holiday season.
Further, the company itself has been under strict scrutiny on the issue as to whether it can force these sellers to use its own logistic services, which are comparatively expensive.
Notably, the move might not go down well with the third-party sellers and impact their relationship with the company. However, the move is testament to Amazon’s commitment to deliver goods to customers on time, which is very crucial for any online retailer.
Moreover, the move highlights that the company is working hard to improve delivery timings after receiving complaints against delayed Prime packages post this Black Friday.
Further, speedy deliveries are likely to enhance shopping experience for customers. Additionally, the latest move is likely to bolster the company’s holiday initiatives.
We note that Prime members pay $119 per year for fast and free delivery. Restricting the usage of FedEx’s ground network for Prime shipments reflects Amazon’s solid Prime oriented focus.
Further, strengthening delivery system will not only aid the company in enticing Prime shoppers but also attract customers to subscribe for Prime. This in turn will drive Amazon’s top line.
Moreover, these strong endeavors are likely to bolster Prime momentum, which remains a tailwind.
Long-term earnings growth rate for Fiverr International is pegged at 44.18%.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Image: Bigstock
Amazon Bans FedEx's Ground Network Usage for Prime Deliveries
Amazon (AMZN - Free Report) has temporarily suspended the usage of FedEx’s (FDX - Free Report) ground delivery network for its Prime shipments, which require deliveries at ultrafast speed.
Notably, the company is of the opinion that the network is slow and needs to speed up. In fact, despite the flurry of holiday orders and shipments, Amazon will not lift the suspension until the network speeds up.
The latest move reflects the tensions between Amazon and FedEx. Notably, the latter did not renew the delivery contract this year following Amazon’s decision to speed up the Prime shipment from two days to one day.
Nevertheless, the e-commerce giant has kept the option of FedEx's faster Express services including air transport open for Prime deliveries to the third-party sellers who are now barred from using FedEx ground services.
However, the third-party sellers have the alternative option of utilizing United Parcel Service’s (UPS - Free Report) ground service. Moreover, the third-party sellers can still use FedEx ground services for non-Prime deliveries.
Consequences of the Move
Interests of the third-party sellers, who account for more than half the products sold on Amazon’s e-commerce site, are likely to be affected. This is because they will have to shift to pricier alternatives for faster deliveries during the peak holiday season.
Further, the company itself has been under strict scrutiny on the issue as to whether it can force these sellers to use its own logistic services, which are comparatively expensive.
Notably, the move might not go down well with the third-party sellers and impact their relationship with the company. However, the move is testament to Amazon’s commitment to deliver goods to customers on time, which is very crucial for any online retailer.
Moreover, the move highlights that the company is working hard to improve delivery timings after receiving complaints against delayed Prime packages post this Black Friday.
Further, speedy deliveries are likely to enhance shopping experience for customers. Additionally, the latest move is likely to bolster the company’s holiday initiatives.
Amazon.com, Inc. Revenue (TTM)
Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote
Amazon Prime: A Key Catalyst
We note that Prime members pay $119 per year for fast and free delivery. Restricting the usage of FedEx’s ground network for Prime shipments reflects Amazon’s solid Prime oriented focus.
Further, strengthening delivery system will not only aid the company in enticing Prime shoppers but also attract customers to subscribe for Prime. This in turn will drive Amazon’s top line.
Moreover, these strong endeavors are likely to bolster Prime momentum, which remains a tailwind.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
A better ranked stock in the retail-wholesale sector that can be considered is Fiverr International (FVRR - Free Report) which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Fiverr International is pegged at 44.18%.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>