Amazon Cuts FedEx Prime Shipping – What Can US Sellers Do?

As of this week, Amazon is no longer allowing third-party sellers to ship their Prime orders using FedEx Ground and Home. For many Amazon sellers, FedEx Ground has been their go-to shipping option for fulfilling Prime orders. With last minute holiday shopping driving up orders, this could not come at a worse time. Take heart – you still have options.

Amazon and FedEx have been going back and forth for quite some time now. In June of this year, FedEx stopped transporting Amazon shipments on FedEx planes in the U.S.

Then, in August, FedEx had also refused to renew its ground delivery contract with Amazon. FedEx explained that this was due to a strategy change where FedEx wished to focus on servicing the broader e-commerce market, not just Amazon.

In September, Amazon stopped using FedEx to fulfill its own first-party orders for the U.S. market. This was shortly after Amazon launched its own delivery network to be used for Prime members.

The announcement this week that Amazon will no longer allow third-party sellers to use FedEx Ground and Home services to fulfill their Prime orders is the latest development in this shipping saga.

How Did Amazon and FedEx Get Here?

Amazon claimed that FedEx Ground and Home services no longer performed to their standards and did not have the capacity to meet the tight time lines that Prime orders require. To ensure that Amazon Prime customers receive their orders on time – and to meet strict holiday cut-offs – Amazon mandated other shipping methods for Prime orders.

Anyone who works within the Amazon ecosystem has experienced Amazon’s “customer obsession” in one form or another. This is just the latest example of Amazon prioritizing its Prime members above all else.

It could also be motivated by the development of Amazon’s own delivery and logistics network, in an effort to control even more of the customer’s experience and save on outside provider costs.

What Can Sellers Do?

If you previously used FedEx Ground to fulfill your Prime orders, you still have a couple options:

  • Faster FedEx: Other, faster, FedEx shipping options are still available, like FedEx Express. This is likely a more costly option, depending on the rates you have negotiated.
  • Lose Prime Designation: Another option is to continue to use FedEx Ground and Home services. Your orders, however, will no longer be considered Prime and your product listing will lose its Prime badge.
  • Amazon Fulfillment: You can also change your fulfillment method on your listing to Fulfilled by Amazon (FBA). By changing to FBA, you’d retain the Prime badge on your listing, you’d ship larger quantities of product to Amazon’s warehouse, but you would have the associated FBA fees for storage and fulfillment.
  • Another Shipping Provider: Lastly, you can choose a different shipping provider like UPS, USPS, DHL or even Amazon Logistics.

While Amazon states that the ban of FedEx Ground and Home services for sellers is temporary, there is no timeline in sight for when it will be lifted. The only insight Amazon has provided is that until FedEx’s performance rates improve for Ground and Home shipping, it will not be available to sellers for Prime order shipments.

With the on-again, off-again relationship between Amazon and FedEx, we would not be surprised to see this resolved after the holiday shipping frenzy. At the same time, we see Amazon extending itself into all facets of the customer experience, regardless of whether Amazon fulfills the order or a third-party seller. We expect to see more shipping skirmishes occur as Amazon’s Prime promises to become more demanding on shippers and sellers alike.

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