Dive Brief:
- Walgreens and FedEx will soon be adding FedEx outlets within Walgreens stores, aiming to multiply FedEx access points to 8,000 sites by 2018, Seeking Alpha reported Wednesday.
- Customers can now not only ship from Walgreens, but also arrange to receive shipments there, providing convenience for those unable to receive packages at home or at work.
- The joint undertaking aims to benefit both: bringing more foot traffic in to Walgreens and highlighting FedEx visibility and access.
Dive Insight:
The newly inked partnership is a large step forward in both Walgreens' and FedEx's supply chain ambitions.
In 2015, FedEx's acquisition of GENCO signaled an increase focused in the cold chain. Recently, the company has invested in various cold storage facilities, including one specifically designed for healthcare kits. In addition the company has been looking to expand its access point program — with a goal of having 8,000 Walgreens pickup locations by 2018. As e-commerce sales continue to surge, the logistics company will be able to offer secure pickup, geographic convenience and reduce last-mile costs with the new partnership.
As FedEx seeks to increase its competitiveness vis-a-vis UPS, whose in-store pickup program has been widely successful, Walgreens is similarly expanding its services to match its rival, CVS.
The drugstore has not only filched pharmaceutical benefit manager deals once exclusive to CVS, but recently purchased Rite Aid, which — like CVS — offers a successful mail-in service for clients. The acquisition is not official, and Walgreens is still navigating antitrust regulations, but the partnership with FedEx could signal an increased investment in the pharmaceutical logistics space, given GENCO's expertise in the cold chain.
That said, various issues of concern remain for both companies as they complete the partnership. Simply, the integration of access-point-like sites in store could be costly, as it may require a separate department within the pharmacy, additional staff, storage space, facility expansion and shipping materials. The added customer convenience will certainly benefit the retailer, as customers may shop in store after picking up packages, but questions remain on the practical considerations of the new deal.
