From Purchase to Porch: Where Online Shopping and Shipping Connect

Raj Subramanian, Executive Vice President of Marketing and Communications at FedEx, provides an inside look at what goes on behind the scenes at FedEx after a consumer clicks “Purchase.”

January 2016

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By now, we’re all accustomed to shopping online. From exhaustively researched tech purchases to bestsellers purchased on a whim while waiting in the morning coffee line, we know we can grab our smartphone, make a few clicks and have an item delivered in seemingly no time at all.

But have you ever thought about what happens after you click “Purchase?”

The click of that button sets into motion a powerful process, engaging miles of transportation networks stretching the globe, supported by an overlay of technology that sorts, tracks and directs your purchases across the country and around the corner, and ultimately, to your doorstep.

An essential value proposition of e-commerce is the ability to order a product online and have it reliably delivered to your doorstep. After all, a virtual buying and selling network must be rooted in the physical. That physical network, built over decades by the world’s transportation companies, is an important concept to consider as e-commerce continues to grow.

The FedEx network reaches more than 220 countries and territories around the globe, linking more than 99 percent of the world’s GDP. This physical network – and the more than 340,000 team members, 650 aircraft and 100,000 motorized vehicles that come with it – is essential to the growth of e-commerce

You’ve no doubt heard a lot about e-commerce growth lately, and with good reason. According to eMarketer, global e-commerce sales are projected to eclipse $3.5 trillion by 2019, accounting for more than 12 percent of all international retail sales by 2019.

E-commerce continues to fuel growth at FedEx as well, as we demonstrated on our Q3 FY16 earnings call earlier this month. Since our inception more than 40 years ago, we’ve worked to build, expand and enhance a physical network designed to move goods around the world.

More than 95 percent of e-commerce packages in the United States are delivered by FedEx, UPS or the United States Post Office. While you may have heard stories about new entities competing with the three major carriers, in reality, in would be a daunting task requiring tens of billions of dollars in capital, and years to build sufficient scale and density to replicate the existing networks.

Retailers and e-tailers have long operated their own transportation networks, largely focused on inventory management, and we expect that will continue. But it’s important to note, that for e-commerce to continue to grow as predicted, the global transportation industry is a vital link.

Once you click “Purchase” the virtual network gives way to the physical, and without it, e-commerce would simply not happen. This important partnership will continue to evolve as e-commerce grows, but the physical delivery of goods, anywhere in the world, will continue to be the true engine of e-commerce.

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