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FedEx Not Keeping Pace

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FedEx Not Keeping PaceFedEx took the shipping world by storm about forty years ago, growing to become the defacto shipping leader, unseating UPS and DHL. But, then after thirty years of strong growth they began to lose their mojo. In 2003, in a reaction to UPS’ acquisition of Mail Boxes Etc., FedEx announced they were buying Kinko’s, a large United States based copy center chain. For me this showed that FedEx was beginning to lose its way, and it appears their connection to customer expectations and the current capabilities of technology is failing. For a company based on the promise of speed, FedEx is becoming increasingly slow.

Increasingly frustrated with the performance of FedEx, Amazon has increasingly turned to the United States Postal Service to deliver its packages, striking a special deals with USPS to even deliver packages on Sunday. And now, Amazon is beginning to buy trailers so they can potentially contract directly with truck drivers to help them move inventory from one distribution node to another.

And for me, my latest FedEx misadventure is a perfect example of why FedEx is now in trouble and at risk of falling from its perch. Here’s what’s happened so far.

  1. I ordered a new laptop from HP that was supposed to arrive in three (3) days on Saturday, July 9th
  2. On Saturday, July 9th I received no contact from FedEx or estimate for when my package might be delivered
  3. On Saturday, July 9th FedEx attempted to deliver the package when we weren’t home
  4. For some reason FedEx then determined they were going to wait THREE DAYS before attempting re-deliver the package
  5. On Tuesday, July 12th I received no contact from FedEx or estimate for when my package might be delivered
  6. On Tuesday, July 12th FedEx despite someone being home nearly all day, FedEx attempted to deliver the package when we weren’t home
  7. On Wednesday, July 13th I received no contact from FedEx or estimate for when my package might be delivered
  8. On Wednesday, July 13th FedEx despite someone being home nearly all day, FedEx attempted to deliver the package when we weren’t home
  9. On Thursday, July 14th I received a missed call and voicemail from FedEx
  10. On Thursday, July 14th I attempted to call the FedEx number given and nobody answered the phone, got voicemail and left message
  11. On Friday, July 15th the Web site indicated that package would be delivered again that day, but no delivery came
  12. On Friday, July 15th I called FedEx and got voicemail
  13. On Friday, July 15th I called FedEx again and got a person, hooray! But, the person said my only option was to drive a fair distance to come pick it up or have it delivered to a FedEx location near me.
  14. On Friday, July 15th I chose to have the package delivered to my local FedEx location (a Kinko’s about 5-10 miles away) under the impression it would be available Saturday, July 16th at this location for my pickup and that they would probably call me after it arrived
  15. On Saturday, July 16th I went to the Kinko’s around 7pm figuring that it must be there by that time (How long could it take to ship a package 15-20 miles from one FedEx location to another?)
  16. On Saturday, July 16th at the Kinko’s the employee was unable to find the package
  17. On Saturday, July 16th at the Kinko’s the employee was unable to get any information from their systems because they were down for maintenance
  18. On Saturday, July 16th at the Kinko’s the employee was able to call and using a voice response system get a Tuesday, July 19th delivery estimate to their location
  19. On Monday, July 18th I received a postcard from FedEx saying they had tried to deliver my package three times and to contact them (NOTE: this was a very confusing postcard, not obvious what to do)
  20. On Tuesday, July 19th I received a phone call from the FedEx Kinko’s store saying they had my package, and I picked it up a few hours later after they used my name (no technology) to search a pile of packages in the back

VERY BAD EXPERIENCE – I got my package TEN DAYS AFTER I was supposed to get it, and nearly two weeks after I ordered the laptop.

Inaccurate information on the web site, poor customer service, bad technology, slow resolution…

These are all signs that this logistics company has gone off track and has not kept pace with the capabilities of technology today.

There is no reason why FedEx shouldn’t have been able to:

  • Show me online exactly where my package is
  • When FedEx is estimating it to be delivered based on the packages loaded on the truck and the planned route
  • Offer me the opportunity to select an alternate delivery time or date or location if the likely delivery time doesn’t work for me

This would be customer service.

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The Innovation Locker

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The Innovation LockerI came across a Wall Street Journal article recently that caught my eye, an article about Amazon Lockers. The concept is pretty simple. Amazon offers customers in select locations the option of having their package delivered to an Amazon Locker instead of to their street address. When the package arrives they receive an email letting them know where to pick it up along with the code to unlock it, and because most of the lockers are being placed in locations like convenience stores, often the customer can pick up their package 24 hours a day.

This is a great potential innovation for the segment of their customer base that has trouble receiving their packages – either because they live in an apartment or condo that is difficult to deliver to, aren’t home to sign, or because they are worried that their package might be stolen.

But the motive for the experiment is not purely an altruistic customer service one, companies like Amazon pay up to 20% more to have packages delivered to a residence. So, delivering a package to a locker helps Amazon save money too – helping to offset the costs of installing and maintaining the lockers. And as a bonus they serve as OOH (Out Of Home) advertisements in a context where people’s minds are already open to buying things.

So, what did the Wall Street Journal miss?

The Wall Street Journal missed the most important part of this whole idea, and one of the potentially most innovative parts of it. If you’re still missing the hidden golden nugget, one more hint before the reveal – think Amazon Web Services (AWS) including services like EC2 (Elastic Computing Cloud) and S3 (Simple Storage Solution). Now you should see that the real innovation nugget here is that what may look at the outset as a service innovation, is actually a platform innovation.

The same problem that has led Amazon to create the potential innovation that is Amazon Lockers, is a problem for all other online retailers. So, Amazon and their customers definitely benefit from the lockers, but they likely can also be leveraged by any retailer that sells their goods on Amazon. AND, in the future there is no reason that in much the same way that Amazon productized S3 and EC2, Amazon could also productize Amazon Lockers and sell it as a service that any other company can purchase and use.

Multiple MailboxesSo who should have come up with this potential innovation?

FedEx, DHL, UPS, and the US Postal Service all missed this as a potential innovation that any of them should have actually developed. The inspiration for this potential innovation was sitting in full view all along. The US Postal Service installed multiple mailbox solutions in many subdivisions long ago to increase efficiency, and make it so that anyone receiving a package receives a key in their mailbox that opens a larger box in the same unit for package retrieval.

Final Thought

Are Amazon Lockers a good idea? A potential innovation? Yes, I think so. Whether they make the transition from interesting experiment or invention to innovation (through adoption) we will wait and see. But the fact that Amazon is expanding their test is a good sign that the transition from invention to innovation will be made. To close, I would just like to say that Amazon has some other possibilities they could (and likely will) explore, including:

  1. Pursuit of space rent reduction through use of the touch screen to suggest certain products for purchase that the host store might sell.

  2. Show suggested products from Amazon with a ‘send me more info’ button to email the customer more information about a product shown on the screen (to their email or possibly to their phone)

  3. Allow the customer to announce via social media that they’ve just picked up their product

  4. Pick select customers to win a prize based on some kind of points scheme related to their number (or value) of pickups – or just by pure chance – (check door 32 and you might be a winner) – adding an element of fun, mystery, and anticipation to the customer’s package retrieval experience

  5. Allow people to order popular products from what is effectively a kiosk, either for immediate delivery or via Amazon Prime delivery back to the locker in a couple of days

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