Dive Brief:
- More than 7,500 Walgreens locations will be available for FedEx package pickup and drop-off just in time for the holidays. The service is a permanent new development, part of the new FedEx On Site program that involves other retailers nationwide, and will extend beyond peak season.
- In addition to Walgreens locations, the press release stated that select Albertson's and Kroger's locations will also be available for FedEx package pickup and drop-off.
- While the accessibility certainly gives FedEx a competitive edge during peak season, the expansion is also indicative of FedEx's increasing success as a 3PL serving an American market dominated by e-commerce.
Dive Insight:
Amazon already allows customers to pick up and drop off packages at designated brick-and-mortar locations, so this new FedEx expansion could almost be considered a response to Amazon's large, diverse fulfillment and distribution network.
But it's more than that. Millennials overwhelmingly prefer to return items to a brick-and-mortar location, so creating this ease of access could prompt more retailers to use FedEx. As e-commerce continues to surge and consumers increasingly prefer to buy goods online, reverse logistics is a paramount concern for 3PLs and retailers. Fast and free shipping is important, but so are fast and free returns.
FedEx's new pickup and drop-off network not only improves its delivery network, but also its reverse logistics operations and overall flexibility. The new partnership with Walgreens places 80% of the U.S. population the 3PL within a nine-minute reach of the 3PL.
The partnership with Walgreens had been announced earlier this year, as both companies seek to increase their competitiveness. FedEx's bid to reach more consumers will also drive more in-store traffic to Walgreens, which is itself competing with pharmacy retailers like CVS.
Moreover, the two pharmacy retailers' moves shows they, too, need to make moves to adjust to the "retail apocalypse." Just this week, CVS launched a next-day delivery program, and earlier this year, Walgreens completed a purchase of various Rite Aid stores with their own delivery program.
The 2017 holiday season will be the first to feature these diverse initiatives from the drugstores, but will it pay off?
