I won’t go as far to say that delivering packages is becoming a commodity, but it’s clearly not enough to fuel future growth and customer value, especially in the e-commerce realm, which is why I believe FedEx decided to significantly strengthen and expand its logistics capabilities by acquiring GENCO. Here are some excerpts from the press release:
Processing more than 600 million returned items annually from many of the world’s leading brands, GENCO is considered a pioneer and market leader in reverse logistics, providing triage, test and repair, remarketing and product liquidation solutions. With $1.6 billion in annual revenue and more than 11,000 teammates at over 130 operations, GENCO offers a complete range of product lifecycle logistics® services to customers in the technology, consumer, industrial, retail, and healthcare markets.
“The acquisition of GENCO will transform our global portfolio through the addition of new best in class supply chain management services,” said Frederick W. Smith, Chairman and CEO of FedEx Corp. “As e-commerce continues to grow, customers of both companies will reap the benefits from the broadened capabilities and powerful new services.”
This move will allow FedEx to more effectively compete with UPS and DHL, which have well-established reverse logistics and test and repair services, and it also gives the company some differentiating capabilities, namely GENCO’s product liquidation and asset recovery service. A potential challenge I see is the impact this deal might have on GENCO’s transportation management service — that is, will customers question the objectivity of GENCO’s recommendations because of FedEx’s transportation assets and services? Many years ago, critics of FedEx’s logistics services would joke that all of its optimized solutions involved filling FedEx trucks and airplanes. You can bet the competition will try to revive that perception again.