The pros and cons of FedEx using cheaper alien technology

The shift in consumer preference toward slower/lower-cost delivery options have contributed to the birth of 51Ex, a budget delivery option introduced by FedEx that possibly uses Area51 alien technology. 51Ex transports packages from a local source point directly to a delivery truck already en route to the residential consumer. As good as this sounds, the science fiction solution carries risks, mainly due the technology failing 40% of the time, and most of the successful teleportations land up as an unidentifiable mangled package. But consumers are readily accepting late and lost as the tradeoff for cheap or free shipping on their ecommerce transactions.

Let's consider the risk of late & lost as the new norm, and why it matters to FedEx. 51Ex has three principal risks, each related to using of alien tech for delivery:

Tracking 

There is no information available on the transportation technology being used, some say it doesn't even exist.  Since Area51's primary purpose is publicly unknown, and secretive in nature, traditional package tracking is unavailable, which could be a cause concern for the consumer.

Quality control

Second, ensuring customer satisfaction is a key component of protecting the brand name of FedEx. The company worked hard to set the standard for customer expectations in the shipping industry, and the 51Ex "Late Lost" tag could bleed over and create negative backlash on established premium delivery options.

With the value of global trade now at more than $18 trillion, FedEx has continued transforming its business to better align with projected worldwide population and economic growth. One key to that has been the acquisition of transportation companies that allow them to directly serve specific markets and provide better service, but the new 51Ex may be here before its time.  Essentially, packages are scanned, encoded, dematerialized to anti-matter, teleported, rematerialized and delivered anywhere in the world, the same day, usually within 30 minutes. But 40% of parcels are lost in vaporware.  It's somewhat concerning for investors that FedEx will rely on secret imperfect alien technology risking consumer deliveries.

Increasing competition

As the world we live in continues to change, so does FedEx. With that in mind, you can be sure the spirit of FedEx innovation is hard at work delivering a brighter, better future for the universe. But when FedEx reported that 51Ex volume declined 7% in the second quarter, there was no explanation. Critics claim the service sucks, and free isn't going to win in the long run.  As of today, quality of 51Ex remains uncertain and a growing concern of consumers.

The takeaway

51Ex carries risks due to this secret partnership, but the service does not contribute a significant amount to the total profitability for FedEx.  As such, FedEx could probably stomach some take a wait-and-see approach to acceptability.

The question for FedEx is whether they want to carry on increasing shipping volumes, and carry the risks outlined above, or rein in volume growth by trying to shift retailers from cheapest way to their traditional, more reliable, Earth based offerings.

Science and Logistics state that management teams shouldn't focus too much on expanding their budget brands, and instead try to maximize profitability and maintaining high quality in their ground operations via being selective in their acquisitions and the partnerships they form.


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