Could FedEx be Beating USPS and UPS in Expanding the use of its Retail Network?

In a story today, the Wall Street Journal reported that Walmart is introducing a program that allows customers to buy online and pick up the item at FedEx Office locations as well as Walmart stores.  Walmart added this delivery option this summer in Los Angeles and Boston, where FedEx has 24 and 18 FedEx Office locations respectively.  In both cities, Walmart has few stores where customers can collect items shipped to a store.

This program allows Walmart to sell its products more effectively to customers who are rarely at home during the day.  Also FedEx Office delivery significantly reduces the cost of delivery of large and heavy items making Walmart's site-to-store via FedEx Office a major advantage for online sales.

Randy Scarborough, vice president of marketing for FedEx Office comments to the Wall Street Journal clearly indicates that FedEx Office is looking at parcel pick-up as a significant new revenue stream for its FedEx Office division.   He stated that FedEx Office expects "other large retailers to take advantage of this."  He further noted that FedEx is planning its "physical network to accommodate this because we do anticipate additional demand." 

The current experiment most likely is focusing on:

• removing the logistical kinks in the process both within the FedEx distribution networks and within the FedEx Office retail locations, 
• help FedEx determine the revenue that a FedEx Office location will receive for acting as a parcel delivery location and 
• help Walmart identify the customers and products that are most likely shipped to a FedEx Office location and which ones still require home delivery.   

Once FedEx begins to expand this program beyond Walmart, it will need to look at secure and less labor intensive means of holding and tendering parcels at its retail locations, especially if demand for parcel pick-ups is concentrated in the same early evening time window that customers are shipping parcels.  At that point kiosks such as those used by Deutsche Post and Post Danmark will begin to look attractive as a cost effective means of allowing customers to get their parcels without having to wait in line for a FedEx Office employee.