FedEx is launching a same-day shipping program with last-mile delivery company OneRail, just after Amazon announced it will start offering quicker shipping times, CNBC has learned exclusively.
The new partnership means customers now have a definite “by end-of-day offering,” according to Jason Brenner, FedEx’s senior vice president of digital.
“Our value prop is about speed, reliability and visibility, and we’re always trying to push the envelope on that value prop,” Brenner told CNBC.
FedEx is the latest company to join retailers’ race to offer the quickest delivery and highest convenience for consumers. Amazon announced last week that it is rolling out delivery windows of just one-to-three hours, and retailers like Walmart and Target have begun offering express delivery options as well — in part to keep up with the dominance of Amazon’s Prime service in recent years.
OneRail, a last-mile delivery software company, uses artificial intelligence to optimize delivery, routing and tracking for retailers’ deliveries. The company said it covers nearly 99% of the U.S. and has a network of more than 1,000 delivery drivers, providing 80,000 30-minute or less deliveries per day.
With the new partnership, FedEx will be able to use OneRail’s technology to allow retailers to offer same-day shipping, in part by utilizing the retailer’s store network. Customers will be able to choose more precise delivery windows, including two-hour and end-of-day service, in addition to near real-time tracking.
“We’re excited to partner with FedEx,” OneRail CEO Bill Catania told CNBC. “It unlocks even more capabilities for the retailer, which really lets them own their customer and their data. Now, they have another option, and on the piggyback of the announcement from Amazon earlier this week, I think this is something retailers are going to feel is very favorable.”
OneRail will now provide retailers with a rate card, and then those companies can determine their own same-day shipping prices depending on their own value propositions.
“This is going to be priced extremely competitively,” Catania said. “Retailers and brands [will be] able to build a highly compelling value proposition to their customers.”
Catania said the partnership has been years in the making, but the companies now felt like “the time is right in the market.” He emphasized that the structure allows retailers to deliver quickly without needing to change their infrastructure, which Brenner said was one of the new partnership’s biggest competitive advantages.
“Customers are increasingly demanding faster shipping,” Brenner said. “Same-day is increasingly a value prop that retailers are looking to offer.”
He added that the platform will also have flexibility for customers to choose specific windows for time-sensitive deliveries like furniture.
“Other retailers are doing this and building out their own ability and their own capabilities to offer same-day, but it’s very complex to manage if you stitch it together yourself,” Brenner said. “It’s very costly to manage, and it’s very complex and costly to scale.”
The announcement comes after Amazon started the shorter delivery windows in some parts of the U.S. to meet growing customer needs. The company got shoppers hooked on fast shipping when it introduced free two-day delivery alongside its Prime loyalty program in 2005. By 2019, it made one-day shipping the standard, and in the years since, it has poured money and resources into expanding same-day delivery.
More than 90,000 items qualify for Amazon’s new delivery program, including pantry staples, cleaning supplies, clothing and more. It plans to roll out its faster delivery windows across a broader swath of the country after its initial launch.
— CNBC’s Annie Palmer contributed to this report.
