Forget Walmart, Amazon has a surprising huge new rival
A surprise competitor has decided it wants to take down the retail giant and it has the infrastructure to make that happen.
Amazon has one massive advantage over it rivals that's nearly impossible to duplicate. The retail giant has an incredible level of infrastructure that would cost tens of billions of dollars to copy.
It's a huge moat that really only Walmart has come close to equaling. No new player can start from scratch to build a match for Amazon's (AMZN) - Get Free Report network of warehouses, distribution centers, and its delivery fleet.
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That's what has kept Shopify from becoming a significant player, and it's why Target had to be clever in how it competed by buying Shipt. That move, which gave the company its own same-day delivery capacity, provided the brick-and-mortar chain a way to leverage its national store footprint.
Basically, any company that wants to compete with Amazon can't start from scratch. Walmart (WMT) - Get Free Report, for example, already had stores with a few miles of 90% of Americans, and it has still had to invest billions to stay even close to its rival.
Kroger (KR) - Get Free Report might be more competitive with Amazon in the grocery space when (or if) it completes its merger with Albertsons (ACI) - Get Free Report, but it still won't be a true national rival. Amazon simply has a scale of infrastructure that's almost impossible to equal because it has steadily invested billions in building out its capabilities.
To compete, a company would need to begin with a huge base, and that's something only a handful of players have. One of those companies, however, which Amazon has jilted in the past, has the infrastructure and has decided to take down retail's Goliath. Image source: Shutterstock
FedEx wants to take on Amazon
In 2019, FedEx (FDX) - Get Free Report made a decision to stop doing business with Amazon. That was a big of a "no, I'm breaking up with you preemptive move" because, in reality, the online retail giant had been building out its own fleet of last-mile delivery vans as well as a fleet of planes in order to take control of its own delivery infrastructure.
Building its delivery system was part of a massive decision to spend billions of dollars to build an infrastructure moat that few companies would ever be able to equal.
You could argue that Walmart has kept up, but the colossus from Bentonville may be the only retail player that controls its own shipping and customer delivery in the same way as Amazon.
Building out a similar network from scratch would take years and tens of billions of dollars. That's a painful lesson Shopify (SHOP) - Get Free Report learned as it tried to become a rival to Amazon by serving as a logistics partner for its clients.
FedEx, however, already has the needed delivery infrastructure nationally and last mile. Now, the shipping giant has shared plans to offer its retailer customers access to an e-commerce platform that would be backed by the company's infrastructure.
FedEx has the infrastructure
When FedEx bought ShopRunner, an online e-commerce marketplace in 2020, the company was not clear about its intentions for the brans. Now, it has shared that it intends to integrate its features into a new ecommerce platform.
"This fall, FedEx is shaking up the e-commerce world with a new data-driven platform named 'fdx.' Engineered to provide online merchants with top-to-bottom e-commerce solutions, this innovative venture is set to revolutionize the supply chain management sphere," RetailWire reported.
The new platform will leverage FedEx's delivery capabilities along with ShopRunner's technology.
"Online sellers, for instance, will be able to provide customers with estimated delivery times during the shopping process. Other features will inform them about the carbon footprint of their supply chain resources and help 'streamline, configure, and manage' returns," the website added.
The new platform was introduced on Jan. 14 at NRF 2024: Retail’s Big Show by FedEx CEO Raj Subramaniam
“FedEx is transforming into a digitally-led business powered by our extensive physical transportation network, leveraging our scale and insights from moving 15 million packages per day. Through fdx, we will enhance our longstanding relationships with merchants of all sizes to help them optimize and grow their businesses through digital intelligence,” he said.
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