Operations

Collab of the Week: FedEx bulks up delivery for Boxed

The growing partnership signals a consumer-focused approach to logistics.

Collab of the Week: FedEx bulks up delivery for Boxed

FedEx is a key ecommerce player. (Photo by Bannon Morrissy on Unsplash)

Grocery and bulk-sized ecommerce platform Boxed is expanding a partnership with FedEx for delivery.

Under the collaboration, FedEx will deliver more shipments to Boxed customers, which include a mix of consumers and businesses. The companies began working together in 2013, and are now growing their work together.

The companies said the new arrangement will provide more Boxed customers with access to seven-days-a-week shipping, and enable consistent delivery service. Additionally, Boxed will be able to save on transportation costs across its fulfillment centers.

Boxed makes bulk consumables that would typically be sold at club membership stores available through its ecommerce platform. In its first quarter earnings call this week, the company reported its Gross Merchandise Value increased 19.2% year-over-year to $53.4 million, driven in part by more B2B deliveries as offices reopen.

The partnership growth with FedEx comes as supply chain issues remain top-of-mind for many ecommerce companies. At the same time, companies are seeking price relief for customers amid inflation. Boxed said it will reinvest the savings into better pricing for customers and more promotions on products.

“In this challenging supply chain environment, ecommerce companies are seeking new avenues to counter escalating costs, and provide the best possible service to their customers,” said Boxed CEO Chieh Huang, in a statement. “This enhanced alliance with FedEx provides us with the opportunity to address both.”

Collaborations provide benefits two ways. In this case, Boxed can respond to customer preference for everyday delivery and realize savings by tapping FedEx’s delivery capabilities, while FedEx bulks up its work with an ecommerce company.

“The collaboration between FedEx and Boxed demonstrates how ecommerce providers and shipping companies can craft new solutions to collectively meet our customers’ new demands and needs today and tomorrow,” said Ryan Kelly, vice president of ecommerce, SAM and retail marketing at FedEx, in a statement. “We’re proud of this alliance and look forward to enabling Boxed and its retailers access to supply chain flexibility and capability that is unrivaled in the marketplace. It is what’s next for businesses of all sizes.”

FedEx has sought to grow its ecommerce capabilities, especially after the growth of online shopping over the last two years led to a big increase in package volume across carriers. In 2020, it acquired ShopRunner, a subscription service that allows shoppers to purchase from a variety of brands and offers two-day shipping. In January 2022, it announced a commerce-focused partnership with Microsoft. The intention behind that collaboration was to combine data insights from FedEx with the B2B offerings of Microsoft Dynamics 365 to create an order management application for brands and retailers.

Analysts see opportunity for FedEx to enable these two ecommerce collaborations to work together. A report by Citigroup, detailed by Reuters, identified an opportunity for FedEx to boost profit by $1 billion by making itself more visible to shoppers. This hinges on FedEx becoming the “universal shopping cart” for ecommerce by growing ShopRunner’s merchant partnerships and subscriber base.

"By leveraging ShopRunner assets through incremental technology investments with its partner Microsoft, we think FedEx can make itself a bigger part of the checkout process, increasing its role in the ecommerce sales experience," Citigroup analyst Christian Wetherbee told Reuters.

FedEx is already an important, if less heralded, part of the ecommerce landscape. Its trucks are visible to shoppers who see packages show up, even though orders are completed through brands and marketplaces. As ecommerce grows, it's becoming more apparent that supply chain is a customer-facing function. Partnerships can help logistics and delivery companies like FedEx deepen their integration on this front.

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