Fed Ex – Fedex Packages Marketing for Overnight Success

Case Study 1: Fed Ex – FedEx Packages Marketing for Overnight Success

• Facts

• Frederick W. Smith founded Federal Express Corporation in 1973. Only U.S. Postal Service and United Parcel Service (UPS) were the only other means of delivery.
• It was started based on an idea Smith thought of when he was studying in Yale in 1965. He believed that people would pay more to get packages delivered overnight.
• FedEx started shipping packages overnight from Memphis, Tennessee on April 17, 1973. Only six packages were handled that first night.
• Today, FedEx handles more than 3 million overnight packages & documents as well as 6 million shipments in a day; controlling more than 50% of the overnight delivery market.
• They own 42,000 drop boxes or 715 world service centers apart from their courier service to facilitate delivery. Thus raking in $31 billion in total revenue.
• FedEx owns 70,000 vehicles, 677 aircraft with 500,000 daily mileages, operating its own weather forecast service and using high-tech software to manage the logistics of planes.
• 2004, FedEx merged with Kinko so as to reach new customers in 11 other countries and expand into Asia and Europe.
• Due to emergency situations in 2004 and 2005, FedEx has now stationed 8 planes loaded with supplies and 5 cargoless planes roam the sky for unexpected situations.
• FedEx has been named one of the “100 Best Companies to Work For” for 8 consecutive years.

• Problems

• FedEx met with competitors and disruptions to agreements with the U.S. Postal Service, thus unable to acquire exclusive right to drop boxes in postal offices.
• Encountered natural disasters which disrupted delivery, possibility of stoppage can come from any country and for many reasons. e.g. political unrest, bioterrorism
• Increase in competition in market has forced FedEx to constantly adapt and not lag behind its competitors; many people in the market may dilute its customer base.
• Run the risk of losing up to 30% of its letter business due to electronic document delivery; advancements in modern technology cause services to be obsolete.
• Employees are important as they are the ones who move and work FedEx, and if they are not trained well/ do not have company goals in mind, it could be detrimental.

• Solutions

• Merged with competitors or introduced new services to customers; in current day, FedEx has innovative IT solutions to help them cope and gives them an edge.
• Came up with contingency plans, implement disaster drills to cover any situation possible; working highly efficiently and effectively to maintain their standards.
• FedEx has maintained good customer relations, engaging them in the delivery process and giving them the ability to resolve/prevent problems.
• Highly effective marketing that seeks new customer needs and builds relations, expanding to ground, freight, express, trade network, office and more.
• Employees of FedEx provides with an enviable corporate culture and workforce, giving them training and compensation so as to retain such loyalty and knowledge.

• Resolutions

FedEx fully purchased Kinko so as to provide new business services and expand its shipping options to nationwide stores. This was done in 2004, so as to keep up with UPS which had done the same by buying Mail Boxes Etc. in 2001. This was done mainly to give the company more access to customers and simply expose customers to more of their services so as to be used more. Although FedEx has been Kinko’s exclusive shipping provider since 1988 and operates staffed counters at 143 of their stores, they add thousands of well-trafficked and centrally located areas to handle all kinds of packages.