Amazon.com says FedEx’s delivery performance is slipping and will no longer let third-party merchants use the company’s ground delivery network for quick Prime shipments through the holidays.
Amazon sent a message to sellers Sunday night instructing them of the change, according to Amazon notifications sent to merchants reviewed by Bloomberg.
More than half of all products sold on Amazon come from third-party merchants who pay Amazon commissions on each sale. Many of those merchants also pay Amazon for logistics services like warehousing and delivery, which puts Amazon in competition with FedEx.
Sellers can oversee deliveries on their own, and many use FedEx ground to meet Amazon’s delivery pledge of one or two days for millions of products. Sellers can still use FedEx’s express service for Prime packages, but that’s a costly option.
Amazon examines its delivery providers’ performance each year to determine order cut-off times for the holidays.
FedEx, in an emailed statement, said “the overall impact to our business is minuscule.” The company’s shares fell 2.4% at 3:12 p.m. in New York.
Some Amazon sellers complained about receiving short notice for the change less than two weeks before Christmas when holiday spending is peaking. Their alternatives include UPS ground.
The Wall Street Journal reported the news earlier.
— Bloomberg’s Thomas Black contributed to this report.