Fueled in part by increased demand for deliveries from the rise in e-commerce, FedEx Ground, the ground shipment operating company of FedEx Corp., is accelerating development of its b2c-focused Home Delivery Network and will have dedicated centers in place to handle package delivery to homes throughout the country by this September, a year ahead of schedule, FedEx says.
The 2-year-old Home Delivery Service is fuelling the growth at FedEx Ground, where revenues were $668 million in the third fiscal quarter ended Feb. 28, up 26% from last year. It accounts for half of FedEx Ground`s year over year package growth, according to a FedEx Ground spokesman. "We don`t break out how much is Internet or catalog, but we hear from our customers that e-commerce is affecting the need for delivery services," he says.
Home Delivery Service, launched in 2000 to mark FedEx Ground`s push into b2c ground delivery as a direct competitor to UPS, initially covered only 50% of the country and concentrated service in major metropolitan areas. The plan was to roll out service across the country in three years. But within the first six months, plans were adjusted to complete the rollout sooner. Today, FedEx Ground has built Home Delivery Service distribution centers that have spread service from 18,000 customers to 90% of the country. The addition of 47 facilities by this September will take the Home Delivery network nationwide.
The completion of the network is expected to be accompanied by a major marketing push to FedEx Ground and FedEx Express (air overnight) business customers. "Not surprisingly, starting out with only 50% of the country covered, there was resistance from shipping customers about giving us all their volume," the spokesman says. "Our sales reps are chomping at the bit to be able to tell customers that we serve the whole country."
The residential package recipient has different expectations than the business customer, he adds. "The home receiver gets a dent in the box and they`ll notice. If the b2b customer taking delivery on 50 boxes in one shipment sees one package that has a dent, if everything inside is in good shape there`s not that level of concern," he says. To meet those expectations and compete with market leader UPS, FedEx Ground`s Home Delivery Service uses a dedicated driver workforce as well as separate distribution facilities from the rest of FedEx Ground, established extended delivery hours including Saturday, and introduced the industry`s first moneyback guarantee of scheduled delivery.