Dive Brief:

• Amazon's third-party sellers can resume sending Prime shipments via FedEx Ground and Home as of Tuesday, according to an email Amazon sent to sellers and shared with Supply Chain Dive. The decision comes after Amazon previously removed the option for sellers to ship Prime orders via FedEx Ground and Home in December 2019, citing late holiday shipments.
• When Amazon instituted the ban it said it would last, "until the delivery performance of these ship methods improves." However, now that FedEx has been "consistently meeting" Amazon's on-time delivery requirements, the ban has been lifted, an Amazon spokesperson told Supply Chain Dive.
• "This is good news for our mutual customers who have come to rely on the FedEx Ground offering," a FedEx spokesperson told Supply Chain Dive via email. The initial ban caused some disruption for sellers that had to switch carriers for their Prime orders and potentially face higher shipping costs as a result.  

Dive Insight:

Meeting customer expectations, whether an order is shipped from Amazon or a third-party seller, is key to maintaining Amazon's brand reputation.

Amazon's Buy Shipping feature for third-party sellers takes into account their "ship-from location, the promised delivery date, and information about the available shipping services" when determining which carriers to include, thereby ensuring sellers can, "reliably meet the promised delivery date to protect the Customer experience," according to the email Amazon sent to sellers. ​

As FedEx didn't reliably meet these on-time delivery requirements during the holiday season, sellers were prevented from using the carrier's Ground and Home services to ship time-sensitive Prime orders, according to an Amazon spokesperson.

FedEx called peak season 2019 "historic" in its emailed statement, saying its service levels were "very strong" amid "a 42% increase in residential shipments for FedEx Home Delivery." The average parcel transit time was 2.42 days, with 18% of FedEx Ground packages delivered early.

While the carrier has yet to release total peak season volumes, FedEx CEO Fred Smith said in December 2019 it delivered 37 million packages on Cyber Monday that year, up from its original estimate of 33 million. This above-predicted spike in parcel volumes appeared to strain FedEx's on-time delivery capacity over the holidays as inclement weather around the country compounded delays. FedEx's overall on-time delivery rate on packages shipped between Thanksgiving and mid-December 2019 was 68.3%, down from 77.5% in 2018, according to a study conducted by Convey. 

Amazon, UPS and the U.S. Postal Service also experienced dips in on-time performance during peak season. However, UPS and USPS came in at 92.7% and 92.3% respectively. Amazon was not included in the Convey study. 

For shippers, on-time delivery can make or break a customer's experience, directly influencing whether the consumer may purchase from the seller in the future. During peak season, these risks can snowball as more consumers shop online for the holidays and last-mile carriers work to cope, successfully or less-so, with the strain.