Amazon Blocks Third-Party Sellers From Using FedEx for Prime Shipments, Citing Performance Issues

The mandate applies to third-party sellers using FedEx's home and ground delivery services. Amazon wound down much of its U.S. business with FedEx earlier this year.

Author:: Annie Gaus
Publish date:: Dec 16, 2019 4:01 PM EST

In the midst of the holiday sales crunch, Amazon has prohibited third-party sellers from using FedEx's ground delivery network for Prime shipments through the holidays.

Amazon informed those sellers of the change in a message Sunday night, the Wall Street Journal reported. Shares of Amazon AMZN were up 0.36% on Monday, while shares of FedEx (FDX) - Get Report slipped 1% on the report.

The change applies to FedEx's Home and Ground delivery services, and came as a result of a slip in FedEx's delivery performance, according to Amazon. Third-party sellers may still opt to use FedEx's faster, but more costly delivery services.

Amazon and FedEx ended a contract earlier this year to manage first-party deliveries in the U.S., but third-party sellers may still opt to use FedEx services.

"The overall impact to our business is minuscule,” a FedEx spokeswoman told the WSJ.

Amazon and other retailers are facing a particularly challenging holiday delivery schedule this year, given a shorter than average time frame between Thanksgiving and Christmas. Amazon, Walmart (WMT) - Get Report and others have also introduced free next-day shipping for certain orders this year.

FedEx reports its third quarter financial results on Tuesday, Dec. 17.