Comprehensive Business Model of FedEx

Updated on: Sep 21, 2021

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FedEx is one of the world’s leading logistics companies. It is based in the U.S. and is one of the most widely used logistics brands in the United States. In the beginning, FedEx was called Federal Express and had several other brands and firms, such as RPS and Robert Express. All of these were marked with the FedEx brand name.

This blog provides a comprehensive examination of the Business Model of FedEx, which addresses its target market, company segments, revenue insights, performance, value position, and SWOT analysis.

Let’s begin by learning more about the company.

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About FedEx

As the ‘great idea’ of charter pilot Fred Smith, Federal Express was created in 1971. It started in 1973 and just 10 years later was the first US company in its first decade to earn 1 billion dollars in revenues. Now FedEx is the biggest express delivery corporation in the world (its moniker, ” FedEx,” officially named in 2000).

Nearly 196,000 workers shift more than 3 million things per day to more than 200 countries, up from 110,000 employees and only five years ago! In 1990, FedEx was awarded the Baldrige Award for its very first service firm. In the past, the Company has extended its ground service business with the acquisition of both Parcel Direct and more than 1.100 Kinko facilities (now the FedEx Kinko Office and Print Centers) in 2004, a former Quad/Graphics division.

In the past, the Company has extended its ground service business with the acquisition of both Parcel Direct and more than 1.100 Kinko facilities (now the FedEx Kinko Office and Print Centers) in 2004, a former Quad/Graphics division.

Recent News about FedEx 

  • FedEx revamped its Instagram strategy by using user-generated content (UGC) to create a more authentic brand image. The goal of this campaign was to show FedEx everywhere by getting followers involved and collaborating with influencers.
  • FedEx’s latest Valentine’s Day campaign on Instagram became a spot for unhappy customers where many of its customers used humor and sarcasm to raise complaints regarding their late deliveries and reliability issues.
  • FedEx’s recent video about how it saved a school play with last-minute costume deliveries grabbed the attention of many viewers. It also became one of the most-watched videos on FedEx’s YouTube channel. 

Now that we’ve had a good picture of the basic information relating to the company, let’s start exploring the business model of FedEx.

BUSINESS MODEL OF FedEx

FedEx provides transportation, e-commerce, and business services through wholly-owned subsidiaries. FedEx creates value by providing 220+ nations with “high value-added” package delivery services. FedEx’s business philosophy is encapsulated by its founding core, “When it absolutely, positively has to get there overnight”. FedEx remains ahead of the curve by delivering on its promise of fast delivery with greater than 99% reliability.

FedEx relies on its highly efficient operational systems, which are centered on planes, for this purpose. FedEx operates on a hub-spoke concept, which means that instead of traveling straight, FedEx planes fly through one of its strategically located hubs. As a result, products are placed on the shelf right away. As a result of this operational strategy, delivery times are reduced.

Business Model of FedEx | IIDE

Services of FedEx

FedEx is a global leader in express transportation, connecting over 220 countries and territories with reliable and time-definite delivery services. They cover more than 99% of the world’s GDP with their advanced technology and air routes. 

FedEx offers a wide range of shipping and logistics services for businesses and individuals. FedEx Ground offers affordable commercial and residential delivery in the US and Canada. FedEx Freight provides flexible freight services, and FedEx Logistics offers comprehensive logistics solutions. For printing, shipping, and corporate needs, there’s FedEx Office. Lastly, FedEx Dataworks uses network data for digital solutions, enhancing operations and supply chains.

Let us now take a look at the FedEx’s target market.

Target Audience of FedEx

From small enterprises to global corporations, FedEx caters to a diverse range of audiences. They specialize in personalized shipping and logistics solutions, making them a top choice for online retailers and individuals sending packages globally. With a robust international network, FedEx is also a trusted partner for multinational corporations and logistics companies, ensuring seamless cross-border services.

Let’s have a look at the buyer’s persona of FedEx given below:

Buyer’s Persona

Name:

Sunil Agarwal

Place:

Bangalore

Age:

35 Years

Profession:

E-commerce Operators

Motivation

  • Discounts on bulk shipping
  • Global Reach
  • Reliability

Interest & Hobbies

  • Reading business journals
  • Time Management
  • Industry Networking
  • Hiking

Pain Points

  • Customs and Regulations
  • Cost Concerns
  • Tracking Issues
  • Complex Logistics

Social Media Presence

  • Facebook
  • Instagram
  • Twitter / X
  • YouTube

Overall, the target audience of FedEx varies in terms of needs, scale, and geographical location. From individual senders to multinational corporations, the company’s diverse service portfolio allows it to cater to a wide range of customers.

Now that we know who FedEx’s target audience is, let’s look at its business strategy and how it uses digital advertising to approach to reach out to them.

Business Strategy of FedEx

FedEx’s business strategy is centered around maintaining its position as a leader in the logistics and delivery industry while adapting to the dynamic needs of the global market. This approach has enabled them to remain competitive and relevant in an industry that is constantly evolving.

FedEx targets both B2B and B2C markets, tailoring services to meet the diverse needs of each segment. With a focus on cutting-edge technology and automation, it focuses on providing a high level of customer service, including reliable and timely deliveries, easy tracking, and responsive customer support.

FedEx continuously innovates its services and operations to adapt to changing market demands, like the growing need for e-commerce logistics. It also offers competitive pricing and value-added services such as logistics consulting and custom solutions for unique shipping needs.

FedEx uses a diverse range of marketing strategies, utilizing various channels for maximum impact. It utilizes targeted digital advertising to reach specific market segments. It also leverages sponsorships and event marketing to increase brand visibility and engage with its target audience.

Moreover, FedEx also invests in social media advertising which plays a crucial role in shaping consumer opinions and behaviors. Their campaigns often feature customer testimonials, real-time service updates, and promotional content that engages the audience. This strategy not only promotes their services but also helps in building a strong brand presence online.

Let us now have a look at digital marketing strategies used by FedEx in recent years:

Digital Marketing Strategies Used by FedEx in Recent Years

Instagram Relaunch With “FedEx In The Wild” Campaign:

When FedEx initially launched its Instagram presence, things didn’t go as they exactly planned. The main reason behind this was their lack of research and assumption that all platforms and content are created equally. They reused content from their other social channels on Instagram without a real strategy. Unfortunately, this strategy didn’t get the success they envisioned.

After failing in the first attempt, they decided to relaunch their Instagram channel with a new strategy. This time they tailored their strategy to Instagram’s unique tone and style, presenting FedEx in an authentic manner. They implemented a purely user-generated content (UGC) strategy, turning their fans into global photographers. They encouraged their worldwide followers to share instances of “FedEx in the wild,” sourcing UGC from various corners of the globe.

Business Model of TripAdvisor - FedEx In The Wild

Source: https://shortyawards.com/9th/test123

This relaunch campaign had the following goals:
  • Increase Instagram follower count
  • Establish a more authentic brand image through user-generated content
  • Encourage global participation and submissions from diverse locations
  • Generate a catalog of high-quality UGC showcasing FedEx in various contexts
  • Create a stronger emotional connection between the audience and the brand
  • Foster a sense of community and belonging among followers
  • Collaborate with influencers and leverage their audiences to expand their reach
  • Showcase the global presence and impact of FedEx
  • Engage with the audience by featuring user stories through UGC
  • Improve brand authenticity by minimizing traditional marketing content on Instagram

To achieve these goals, the team at FedEx reviewed 1,000 UGC images on a weekly basis and handpicked some of the most impactful and relevant ones for sharing. For instance, during a snowstorm in New York, a UGC image of a FedEx truck navigating a snow-filled Times Square became one of their highest-performing posts.

In addition to featuring UGC images on their Instagram channel, they also experimented with other UGCs to ensure relevance. For instance, they collaborated with a top fashion influencer and had her pose in front of a FedEx truck for a street-style shoot.

Overall, this UGC strategy has significantly enhanced FedEx’s Instagram presence, making its customers and fans global brand storytellers. It also led to increased engagement, deeper relationships with the audience, and a more authentic brand image.

FedEx’s Valentine’s post on Instagram

FedEx recently posted a Valentine’s Day post on Instagram featuring two digital cards where they encouraged their audience to take screenshots of these cards and send them to loved ones. The main goal behind this was to foster emotional connections with its audience by leveraging the occasion of Valentine’s Day.

Business Model of FedEx - Valentine's Day post

Source: FedEx’s official Instagram channel

With 1,799 likes and sparking 186 comments, the post received a decent response. However, it also became a complaint board for many unsatisfied customers. Users leveraged this post to express their dissatisfaction with the brand. Employing humor and sarcasm, many users raised complaints regarding their late deliveries and reliability issues.

Business Model of FedEx - Valentine's Day post Negetive Comments

Although these negative comments somewhat overshadowed the campaign’s message, they also gave FedEx a chance to address their issues and show a human touch. How FedEx deals with these feedbacks will be crucial in shaping its image on social media.

FedEx’s School Play Costume Rescue

FedEx recently released a video on YouTube about a school play that almost got ruined due to a costume problem and how FedEx saved the day by delivering replacement costumes just in time for the play. It’s a feel-good story showcasing how FedEx is all about great customer service.

With 974K views, this video got a lot of attention from the audience. Within just two weeks, it became the 9th most-watched video on FedEx’s YouTube Channel.

Here are a few of the things FedEx aimed at with this video:

Engage People: FedEx wanted to tell a story that people could connect with emotionally.
Show What They Stand For: FedEx wanted to show they care about their customers and will go the extra mile to help.
Spread Holiday Cheer: Aligning with the holiday season, the campaign aimed to spread joy and show FedEx as an important part of making holidays special.

Overall, this campaign is a great example of how YouTube is a powerful platform for brand storytelling. It not only showcased FedEx’s commitment to service but also connected with its audience on an emotional level, successfully enhancing its brand.

Key Takeaways for Marketers: Learning from FedEx’s Recent Digital Marketing Campaigns

In today’s competitive digital landscape, effective digital marketing strategies are essential to stand out, connect with the audience, and drive meaningful engagement. Here are some key takeaways for marketers from FedEx campaigns and how marketers can use these to enhance their own strategies, optimize customer experience, and boost brand visibility.

Platform-Specific Strategy is Crucial: 

The initial failure of FedEx on Instagram highlights how important it is to tailor a content strategy to a specific platform. Marketers should avoid a one-size-fits-all approach and adapt their content according to the unique tone and style of each platform.

Use User-Generated Content (UGC) and Let Your Customers Tell the Story: 

FedEx’s successful Instagram relaunch relied heavily on user-generated content. This is a great example of how leveraging customers as brand storytellers not only fosters authenticity but also creates a sense of community. Marketers should actively encourage and showcase UGC to connect with their audience on a deeper level.

Be Prepared for Negative Feedback:

Despite its success, the Valentine’s Day post by FedEx attracted many negative comments. How FedEx’s response to these comments will be highly pivotal in shaping its social media image. Marketers should always be prepared to address negative feedback with a human touch.

Use the Power of Storytelling on Video Platforms: 

The YouTube video showcasing FedEx’s role in rescuing a school play effectively used storytelling to engage and connect with the audience emotionally. Marketers should consider platforms like YouTube to tell their brand story, while also making sure it resonates emotionally with the audience.

Customer-Centric Content: 

FedEx’s school play video emphasized their commitment to great customer service. Marketers should prioritize creating content that showcases the brand’s values and commitment to customer satisfaction, reinforcing a positive brand image.

Let us now have a look at some of the top competitors of FedEx and what makes them different from it.

Top 5 Competitors of FedEx

Amazon Logistics:

Amazon has been rapidly expanding its logistics operations in order to reduce its reliance on traditional carriers like FedEx and UPS. With a focus on in-house delivery capabilities, Amazon Logistics aims for faster, more cost-effective shipping for its e-commerce platform. If you want to learn more about Amazon, check out our comprehensive case study on the Business Model of Amazon.

DHL:

DHL is a part of Deutsche Post DHL Group and is the global competitor of FedEx. It’s known for its strong international presence and comprehensive logistics solutions. To learn more about DHL and how it uses digital marketing to be competitive in today’s exportation industry, check out our comprehensive case study on the Business Model of DHL.

United Parcel Service (UPS):

UPS is one of the largest global logistics companies offering services similar to FedEx including package delivery, freight forwarding, and supply chain solutions. What gives UPS the upper hand over FedEx is it has a larger ground network. It focuses on efficient delivery, advanced technology, and a broad range of services.

Blue Dart:

Primarily operating in India, Blue Dart is a leading logistics company in South Asia. It offers domestic and international courier services, freight services, and customized logistics solutions. Its strength lies in its extensive domestic network and focus on serving the Indian market. To gain more insights into its market positioning and promotional tactics, check out our detailed guide on the Marketing Strategy of Blue Dart Express.

USPS (United States Postal Service):

While not a direct competitor in the same sense as private courier services, USPS competes with FedEx in various segments, especially in domestic mail and package delivery. With the help of its vast infrastructure across the United States, USPS offers more economical shipping options, especially for small and lightweight packages.

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Conclusion

FedEx is accustomed to leading the way. FedEx undertook some significant digital transformations. For example, FedEx supply managers are working to increase clients’ visibility, control of self-sufficient vehicles like Roxo, the FedEx SameDay Bot that stimulated cutting edge innovation, and to develop their leading tracking technology using their newest FedEx Surround and SenseAware ID technologies. FedEx’s new strategy will contribute to the more effective fulfilment of FedEx’s purple promise and helps FedEx and its customers to live through its finest years.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

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