FedEx Responds to E-Commerce Boom with Increased Pricing

While FedEx has traditionally charged to ship packages based solely on weight, the company has changed its policy to also price packages according to size. The move is expected to increase the price of over a third of FedEx’s U.S. ground shipments, and dramatically impact e-commerce companies. The next question is whether or not UPS will follow FedEx’s lead and consider a new pricing strategy as well. In the past, UPS and FedEx have kept similar pricing, rather than use pricing as a competitive advantage.

This price increase will mainly affect items that are bulky, but lightweight, such as toilet paper, diapers, and shoes.

“The change in pricing could dramatically affect either online shoppers or retailers or both. Someone will have to swallow the estimated hundreds of millions of dollars in extra shipping costs,” reports The Wall Street Journal.

This will especially impact Amazon, which has said that shipping is its biggest and most rapidly increasing cost.

Retailers are unlikely to charge their customers more for shipping, especially since research has proven that most shoppers leave online purchases at the checkout page when they see a large shipping fee. To combat this, retailers may charge more for merchandise, so shoppers are unaware of the extra cost.