FedEx has partnered with discount retailer Dollar General with plans to offer package drop off and pickup services at 1,500 Dollar General stores this summer, giving it access to rural locations where it didn’t have a strong presence.
The partnership will expand to 8,000 Dollar General locations by the end of 2020, allowing consumers to both receive ecommerce orders and send back returns.
FedEx has been aggressively expanding its network to offer convenience to shoppers and a value-add for its retail and ecommerce customers. It has struck similar partnerships with Walgreens, Albertson’s and Krogers, giving it a total of more than 62,000 locations, when partner locations, FedEx retail stores and its drop boxes are factored in.
An expanded network also helps FedEx cut down on supply chain costs by better managing the expensive last mile of ecommerce delivery through package consolidation and fewer trips to homes and offices.
“Dollar General is the perfect retailer to help us meet the growing need for convenient, secure drop-off and pickup options in a variety of rural communities,” said Scott Harkins, senior vice president, Customer Experience Marketing, FedEx Services in a release. “We understand customers may not always want packages delivered to a home or office. They want secure, alternate delivery options, and we’re on a mission to make that happen.”
Harkins said the Dollar General partnership will significantly expand its geographic reach such that 80% of the U.S. population will be within 5 miles of a FedEx location by the end of 2020, up from 55% currently. UPS claims similar domestic coverage: Its 9,000 Access Point locations put 78% of the U.S. population within 5 miles of one, according to spokesman Matthew O’Connor. They include small local businesses like grocers, florists and dry cleaners as well as UPS stores.
As it pushes more heavily into ecommerce business, FedEx last month announced an expansion to seven-day service starting in 2020, while also planning to divert about 2 million parcels annually from the U.S. Postal Service into its network to build density and efficiency. Earlier this month, FedEx said it would let its air express contract with Amazon lapse on June 30, opening the door to higher-margin volume from other ecommerce shippers. The company said Amazon represented just 1.8% of its 2018 revenue.