FedEx Partners With Dollar General for Package Pickup and Drop-Off

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="FedEx (NYSE: FDX) knows where consumers are shopping, and it wants to be there for them. This summer, the package carrier will add pickup and drop-off service at 1,500 Dollar General (NYSE: DG) stores, and plans to expand it to 8,000 stores by 2020, meaning 90% of the country’s population will live within five miles of a FedEx access point.” data-reactid=”11″>FedEx (NYSE: FDX) knows where consumers are shopping, and it wants to be there for them. This summer, the package carrier will add pickup and drop-off service at 1,500 Dollar General (NYSE: DG) stores, and plans to expand it to 8,000 stores by 2020, meaning 90% of the country’s population will live within five miles of a FedEx access point.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The carrier is making a concerted effort to become more tightly enmeshed in e-commerce. By severing its ties with Amazon.com (NASDAQ: AMZN)&nbsp;for its Express delivery service, launching seven-days-a-week delivery, and lowering Express delivery fees, it’s putting itself in one of the largest retail footprints in the country and vastly expanding its reach.” data-reactid=”12″>The carrier is making a concerted effort to become more tightly enmeshed in e-commerce. By severing its ties with Amazon.com (NASDAQ: AMZN) for its Express delivery service, launching seven-days-a-week delivery, and lowering Express delivery fees, it’s putting itself in one of the largest retail footprints in the country and vastly expanding its reach.

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Image source: FedEx.

Meeting customers where they live

With almost 15,600 stores stretched across 44 states, Dollar General has an expansive footprint. It opened 900 stores last year and another 240 in the first quarter, and plans to open a total of 975 new stores in 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="That's a much more impressive touchpoint for FedEx than Amazon has with Kohl’s (NYSE: KSS), where the department store chain serves as a return center for packages purchased on the e-commerce giant’s website. Because Kohl’s operates around 1,100 stores nationwide, many of which are located in strip malls in urban centers in the Midwest,&nbsp;it’s a much more limited network of locations.” data-reactid=”27″>That’s a much more impressive touchpoint for FedEx than Amazon has with Kohl’s (NYSE: KSS), where the department store chain serves as a return center for packages purchased on the e-commerce giant’s website. Because Kohl’s operates around 1,100 stores nationwide, many of which are located in strip malls in urban centers in the Midwest, it’s a much more limited network of locations.

Dollar General also targets low-income neighborhoods and rural towns that are traditionally overlooked by big-box merchandisers and national retailer. Its customer demographic includes people typically making less than $35,000 a year and living in towns with fewer than 20,000 people. In fact, three-quarters of the country’s population lives within a five-mile drive of one.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This focus helps explain why the dollar store enjoys sales and earnings that regularly exceed expectations and why it’s a smart partner for FedEx.” data-reactid=”29″>This focus helps explain why the dollar store enjoys sales and earnings that regularly exceed expectations and why it’s a smart partner for FedEx.

Ready for e-commerce’s growth

The carrier notes that regardless of where they live, consumers want convenient options for package delivery and returns. While a physical store isn’t a necessity for an e-commerce operation, by adding thousands of Dollar General locations, it helps retailers provide more options to better serve their customers. And with a third of people returning what they buy online, being able to drop it off at the local dollar store improves upon the convenience.

On the company’s blog announcing the partnership, FedEx noted, “When it comes time for returns, 47 percent of customers prefer to make them in-store. With the addition of more than 8,000 Dollar General stores… online merchants can enjoy the perks of a physical store without having to invest in building one.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The partnership also seems to be part of a plan FedEx is developing to counteract the growing threat of Amazon. Although it insists dropping Express deliveries for the online retailer had nothing to do with Amazon building its own delivery service that may one day challenge FedEx and UPS, by doing so&nbsp;it opens up more delivery capacity for other e-commerce players.” data-reactid=”33″>The partnership also seems to be part of a plan FedEx is developing to counteract the growing threat of Amazon. Although it insists dropping Express deliveries for the online retailer had nothing to do with Amazon building its own delivery service that may one day challenge FedEx and UPS, by doing so it opens up more delivery capacity for other e-commerce players.

FedEx seems to be rolling out the red carpet to online retailers that are also worried about Amazon and making drop-off points for purchases available to communities that otherwise might not have them reinforces how the carrier is focusing on their needs.

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