Dive Brief:

• FedEx and Dollar General announced a partnership whereby FedEx will offer secure in-store parcel pickup and drop-off in 8,000 Dollar General stores by 2020. The partnership will increase FedEx's retail presence to 62,000 stores across the country.
• "Before our alliance with Dollar General, 55% of people living in rural communities lived within 5 miles of FedEx hold location," Rae Lyn Rushing, senior communications specialist at FedEx, told Supply Chain Dive via email. Now, the company estimates "90 percent of Americans will ultimately live within five miles of a FedEx hold retail location," when the initiative launches later this summer.
• "This collaboration furthers Dollar General’s ... long track record of serving rural communities by combining our expansive store presence with FedEx’s global reach" said Jason Reiser, Dollar General's executive vice president and chief merchandising officer in a press release. 

Dive Insight:

Dollar General's significant rural footprint and popularity with customers was the driving force behind the partnership, according to a joint press release. With demand for last-mile e-commerce delivery on the rise, servicing rural areas is a challenge for shippers and can be costly for consumers that live outside of major suburban or metropolitan areas. 

Not only is the retailer's network far-reaching, with over 15,597 locations in 44 states nationwide, but the customers it serves "may not always want packages delivered to a home or office," said Scott Harkins, senior vice president, Customer Channel Marketing, FedEx Services. "They want secure, alternate delivery options, and we’re on a mission to make that happen." 

The Dollar General locations will be part of FedEx's OnSite program, allowing customers to drop off and pick up pre-packaged and labeled packages sent via FedEx Express or FedEx Ground to their local store.

"When it comes time for returns, 47 percent of customers prefer to make them in-store" Brie Carere, executive vice president and chief marketing and communications officer for FedEx, wrote in a blog post. "With the addition of more than 8,000 Dollar General stores ... online merchants can enjoy the perks of a physical store without having to invest in building one."

This news comes on the heels of two recent announcements from FedEx — it will offer FedEx Ground deliveries seven days a week year round starting in 2020, and its FedEx Express branch would break ties with Amazon for domestic air shipments. Both moves were motivated by the company's goal of capitalizing on the growing e-commerce market.

Similarly, retailers such as Kohl's and Nordstrom have incorporated e-commerce pickups and returns — either of their own products or Amazon's — in their brick-and-mortar stores as a way to manage e-commerce growth and create a more frictionless experience for customers.

According to FedEx, "50 percent of these shoppers want additional delivery options and a third of the time they’re returning what they buy online." As a result, having convenient return options gives e-tailers, and the brick-and-mortar locations that offer these options, an advantage over their competitors, something FedEx and Dollar General are counting on this summer and going into the holiday season.