Fedex Corp - Move To The Internet

According to a November 1997 article in Fortune, FedEx had been engaged in e-commerce
since the 1970s with its COSMOS and DADS systems. Its PC-based automated shipping
system, known as FedEx PowerShip, had first been implemented in 1984. The company's
handheld bar code scanner system, known as SuperTracker, had been in place since 1986.
"Smith figured out two decades ago that FedEx was in the information business, so he stressed
that knowledge about cargo's origin, present whereabouts, destination, estimated time of arrival,
price, and cost of shipment was as important as its safe delivery. He has therefore insisted that
a network of state-of-the-art information systems—a sophisticated melange of laser scanner,
bar codes, software, and electronic connections—be erected alongside the air and vehicle
networks." By the late 1990s, more than 60 percent of clients were using FedEx desktop
terminals and software to create their own labels and send electronic messages to the firm
when their shipments were ready for pickup. Eventually, FedEx was able to use this information
technology to determine the profitability level of each customer and negotiate price increases
with those who actually had been costing the firm money. The firm also began offering supply
chain consulting services, helping clients to streamline order fulfillment processes electronically.

In 1994, FedEx launched its Web site, which allowed clients to track package shipments online.
Software known as FedEx Ship permitted shipment processing via desktop terminals. It was two
years later that FedEx made its first major move toward conducting operations on the Internet.
The company released its first version of FedEx interNetShip, the first service that permitted
clients to manage shipping via the Internet. interNetShip also allowed users—both shippers and
recipients—to access shipping information via the Internet and print shipping documentation.
FedEx began offering e-business tools related to FedEx shipping and tracking processes in
1997. One year later, the firm launched FedEx Logistics to oversee its growing supply chain
services operations.

Despite the firm's early e-business savvy, most analysts believed that rival UPS had gotten the
upper hand in Internet-based shipping. This partly was because it focused on deliveries to
residences, which began dramatically increasing as businesses and consumers alike started to
purchase everything from books and CDs to computers and software on the World Wide Web.
Hoping to compete with UPS and its leading domestic ground delivery service, FedEx paid $2.4
billion for Caliber System, a trucking company with a fleet of 13,500 trucks, in January of 1999.
The deal was designed to strengthen FedEx's small foothold on the business-to-business
ground shipping market and also allow it to launch business-to-consumer delivery services.
FedEx established FedEx Home Delivery to handle its new residential ground delivery
operations. The firm also established the FDX Corp., a holding company under which was
placed the FedEx air shipping operations, as well as Caliber and RPS, a former Caliber unit that
was the single largest ground shipment rival of UPS. Online holiday shopping, which accounted
for $650 million in 1997, grew to roughly $4 billion over the holiday season of 1999. At that time,
FDX handled shipping for only 10 percent of all goods sold online, compared to the 55 percent
handled by UPS, which had forged alliances with the likes of e-tailing giant Amazon.com. The
FedEx Marketplace was designed that year as a hub for e-merchants using Federal Express
shipping.
In early 2000, FDX diversified into customs brokerage with the purchase of Tower Group
International, a unit that eventually formed the core of a new subsidiary, FedEx Trade Networks
Inc. The trading unit also provided trade consulting and international transportation and logistics
services. In April, FDX changed its name back to FedEx Corp., and the core Federal Express
business shortened its name to FedEx Express. Ground delivery operations, including RPS,
were renamed FedEx Ground. The firm forged a deal with Orbit Commerce Inc. to jointly offer e-
commerce services to small businesses—those with less than 100 employees—via a new
FexEx eCommerce Solutions unit which would provide site design, online catalog development,
transaction processing, and shipping services. According to a June 2000 article in B to B, the
new venture faced many challenges. "For starters, FedEx is late to the party. Web portals such
as Yahoo! have for some time offered store-building services, as does nearly every Internet
service provider. Closer to home, competitor United Parcel Service of America has provided e-
commerce services on its Web site since 1997, through vendors Harbinger Corp. and IBM
Corp." FedEx began offering its eCommerce Builder Internet platform free to clients in July.
Along with e-commerce services, it included hosting on the FedEx MarketPlace site, with 5MB
of storage and 50MBps bandwidth, and four Web pages.

Also in 2000, in an alliance with Amazon.com, FedEx agreed to deliver 250,000 copies of a new
Harry Potter release to residential customers. The firm upgraded its NetReturn system in
November, realizing that e-tailers were seeking ways to avoid many of the problems
encountered with merchandise returns made by online shoppers after the previous holiday
season. The enhanced program allowed shoppers to print return labels from their own
computers and provided maps to sites that accepted drop-offs for returns. FedEx also continued
to offer its traditional NetReturn service, which involved actually retrieving the package from the
online shopper and sending it to the location specified by the e-merchant. To expand its less-
than-truckload freight operations, the firm paid $1.2 billion for American Freightways Corp. in
December. FedEx merged American Freightways with former Caliber Systems unit Viking
Freight into its FedEx Freight arm. As part of the deal, FedEx assumed $250 million in American
Freightways' debt. This concerned some analysts, since FedEx already was spending billions of
dollars each year to maintain its costly infrastructure. By the end of 2000, more than 20,000
client Web sites were linked to the FedEx MarketPlace, and the eCommerce Builder unit had
secured roughly 2,000 customers. Earnings totaled $688 million on sales of $18 billion.

In February of 2001, the U.S. Postal Services agreed to put FedEx boxes in roughly 10,000 post
offices across the nation. A month later, in conjunction with w-Technologies Inc., FedEx began
making its FedEx.com site available on most wireless devices, like cell phones. FedEx also
continued working on the expansion of its home delivery network, which it expected to complete
by 2003. As the Internet continues to change the way businesses operate and consumers shop,
major shipping and logistics firms like FedEx likely will continue to benefit. However, whether or
not the firm's new ground shipping and home delivery operations will help FedEx steal market
share from competitor UPS remains to be seen.

********************
FURTHER READING:

Cruz, Mike. "Integration is Key to Survival—FedEx Says Companies Must Unite in a Collaborative Supply
Chain." Computer Reseller News. December 4, 2000.

"FedEx Assists Online Deployments." InfoWorld. July 31, 2000.

FedEx Corp. "Corporate Timeline." Memphis, TN: FedEx Corp., 2001.
"FedEx Corp." In Notable Corporate Chronologies. Farmington Hills, MI: Gale Research, 1999.
"FedEx Moves Ahead with Wireless Plans." eWeek. April 2, 2001.
"FedEx Picks Up American Freightways." Mergers & Acquisitions. January 2001.
Fonseca, Brian. "FedEx Readies Online Returns Program for the Holiday Rush." InfoWorld. October 16,
2000.
Frook, John Evans. "FedEx, Orbit Offer E-Commerce Help; Late to the Party, Shipping Giant to Offer Web-
Building Services for Small Businesses." B to B. June 19, 2000.
Grant, Linda. "Why Fed-Ex Is Flying High." Fortune. November 10, 1997.
O'Reilly, Brian. "They've Got Mail! The Growth of Internet Commerce Has Raised the Stakes in the
Boxing Match Between UPS and FedEx." Fortune. February 7, 2000.
Robinson, Sean. "E-Commerce Delivers Growth in Shipping Industry." Puget Sound Business Journal. May
12, 2000.
Rynecki, David. "Net Effects: Why E-Commerce Makes UPS a Complete Package, But Not
FDX." Fortune. February 7, 2000.
Tatge, Mark. "Going Postal" Forbes. February 5, 2001.
SEE ALSO: Fulfillment Problems; Order Fulfillment; Shipping and Shipment Tracking; United
Parcel Service (UPS)

Read more: Fedex Corp - Move To The Internet - Shipping, Services, Firm, Commerce, Online,
and Business http://ecommerce.hostip.info/pages/444/Fedex-Corp-MOVE-
INTERNET.html#ixzz1ZMsOwnRi