Amazon's top brass levied the ban right before Christmas, saying FedEx was "too slow" to keep up with the online retailer's demands.
- Amazon has finally lifted its pre-holiday ban on FedEx as a shipping partner.
- Amazon banned sellers from using FedEx during the busiest part of the year because it felt that the shipping service couldn't keep up with demand.
- The third-party shipping ban was also a gambit in a contract dispute between the two companies.
After restricting its third-party sellers from using FedEx's shipping services during the busiest time of the year, Amazon announced earlier this week that the ban has been lifted. The reversal is the latest move in a series of tit-for-tat actions that the two companies have taken against each other for months now.
According to Bloomberg, whose reporter obtained a copy of the email Amazon sent to its sellers on Monday, the massive online retailer lifted the ban at 5 p.m. EST on Tuesday. Shares of FedEx increased by as much as 3.3% once news of Amazon's renewed cooperation started making the rounds.
"This is good news for our mutual customers who have come to rely on the FedEx Ground offering," a FedEx representative told Bloomberg in an emailed statement. "Our service levels have been very strong throughout a historic peak season."
When Amazon initially made the decision to stop allowing third-party sellers from using FedEx as a shipping option, the corporation said it was because the FedEx Ground and Home services were too slow to keep up with demand. Amazon did say at the time that the ban was temporary, stating that the restriction would exist "until the delivery performance of these ship methods improve."
Tensions ongoing between the two companies
Amazon and FedEx haven't particularly seen eye to eye for a while now. The two companies' long back-and-forth has resulted in major actions that often force third-party sellers to find alternative shipping methods.
FedEx let its contract to handle domestic ground deliveries with Amazon lapse back in August. The decision came two months after the company said it would stop its express shipping service for the online retailer. The move seemed to be largely a response to Amazon starting to create its own shipping solution in an effort to cut out the middleman.
"FedEx has made the decision that it no longer wants to sharpen its executioner's sword," Scott Galloway, a professor at New York University's Stern School of Business, told The New York Times in August. "It's another reflection of this winner-take-all 'Hunger Games' economy that is dominated by an increasingly few number of companies."
Sellers growing weary of disputes
As the two companies trade jabs, third-party sellers are often the ones left having to react at a moment's notice. Third-party sellers are a major part of Amazon's business, so unrest in that camp could be troublesome for the Seattle-based retailer.
Amazon has touted its relationship with third-party sellers in recent years, citing that its Amazon Storefronts initiative has managed in the past to sell "more than 250 million products to more than 70 million unique customers" in a year.
This demographic of independent third-party sellers is also incredibly important to Amazon because they sell more than 4,000 items a minute, with the total sales accounting for 58% of all physical gross merchandise sold. Independent sellers are so crucial to Amazon's success that they've made sweeping changes to its platforms to not only protect third-party sellers, but also regulate them against bad practices.
As a result of Amazon's actions against FedEx, among other things, some vendors have complained that the retailer is forcing them to use its in-house shipping service instead of a different option. The problem has gotten so bad that at least one vendor has filed an official antitrust complaint to Congress about Amazon's practices.
In the complaint, the vendor alleged that "merchants using Amazon logistics services aren't penalized when customer orders arrive late, even though they frequently do, since that's Amazon's responsibility. Those who handle their own logistics face stiff penalties for even minor delivery mishaps, including being suspended from selling on the platform."
Fees associated with Amazon's shipping services have gone up by 20% since 2016 and often cost significantly more than competing shipping services. The complaint also alleges that Amazon is most likely to highlight items that are "fulfilled by Amazon" over items that aren't.