Apr 08 2017

Amazon’s Free Shipping Pushes Small Retailers, Delivery Firms to Compete

Shipping companies are vying for the chance to speed up deliveries for startups and national chains

Shipping companies, ranging from startups to the biggest package handlers, are vying to help small retailers compete with Amazon.com Inc.’s AMZN -0.62% rapid expansion of free shipping.

Logistics companies say demand for fulfillment services has ballooned in the past year, as Amazon casts a bigger shadow across the retail world and the shipping market. Retailers are rushing to offer faster, cheaper delivery to keep customers from flocking to Amazon Prime, which promises two-day shipping on millions of items. Shipping companies fear the e-tailer will starve their networks by handling more of its own orders.

They see a lifeline in going after smaller customers, ranging from retail startups to midsize national chains that can’t afford to match the billions of dollars Amazon, Wal-Mart Stores Inc. and other major retailers are spending to speed delivery.

It is a shift in strategy for companies like FedEx Corp. , which until recently tailored their e-commerce services mainly to giant retailers needing to quickly process thousands of shipments a day. Now, they are betting even tiny online storefronts will pay for access to nationwide networks of warehouses, trucks and planes that can whisk online orders to customers’ doorsteps in less than 48 hours—even if Amazon’s growing same-day delivery service remains out of reach for most.

“There is no universe where you can beat Amazon’s shipping prices,” said Stefan Weitz, chief product and strategy officer at Radial, which handles online orders from about two-dozen warehouses and clients’ stores. “I don’t have to beat Amazon. I have to get close enough to provide a service level to my customers.”

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