Microsoft (MSFT) and FedEx (FDX) will join forces in a multiyear technology and logistics partnership, the companies announced this week. The collaboration, to involve new product development, will combine the global digital and logistics network of FedEx with Microsoft’s intelligent cloud, and could eventually reshape e-commerce as we know it.
“Together with Microsoft, we will combine the immense power of technology with the vast scale of our infrastructure to help revolutionize commerce and create a network for what’s next for our customers,” said Frederick W. Smith, chairman and CEO of FedEx, in a statement.
Also this week the companies announced their first offering, FedEx Surround, aimed at providing real-time analytics into commerce supply chains and shipment tracking.
FedEx Surround can also collect multiple data points gathered through FedEx’s enhanced scanning and proprietary technology, and analyze them using Microsoft’s suite of AI, machine learning and analytics solutions.
“This will provide participating businesses with not only enhanced visibility of a package’s location during its journey,” the statement said, “but also knowledge of global commerce conditions and external challenges in near-real-time, such as severe weather or natural disasters, mechanical delays, clearance issues and incorrect addresses.”
Anything that drives “more precise” inventory management and logistics and also improves the ability of companies to “sense and respond” to potential issues and disruptions using real-time data will prove valuable, Brittain Ladd, a former Amazon executive who now runs his own consultancy, told FreightWaves.
But Ladd said he believes “the ambition is much bigger,” and that Microsoft will ultimately leverage the partnership to reimagine the shopping experience in virtual not physical stores, using a combination of AI, machine learning, voice activation and virtual reality. LinkedIn, owned by Microsoft, would serve as the new e-commerce marketplace.
“Online shopping is old school,” Ladd said.” Virtual reality is the future, and Microsoft will be the one to usher in the new age of retail.” In that context, Ladd said, “FedEx will be the dedicated provider of fulfillment.”
Whether that prediction comes to pass, it’s hard not to view the partnership as a direct challenge to Amazon (AMZN), as the e-giant continues to build out its own logistics and technology networks.
Less than a year ago, FedEx ended its ground and air shipment contract with Amazon. And as GeekWire observed, the partnership bears some similarity to previous Microsoft collaborations with Walmart and Kroger, Amazon competitors that may be less than eager to rely on Amazon Web Services (AWS) for their cloud services needs.
Azure Cloud is the No. 2 public cloud platform behind AWS.
In the statement, Satya Nadella, CEO of Microsoft, highlighted the need for improved logistics, saying, “now more than ever, organizations are counting on an efficient and capable supply chain to remain competitive and open for business.”
But Nadella also hinted at much bigger things to come.
“Together with FedEx, we will apply the power of Azure, Dynamics 365 and their AI capabilities to this urgent need, building new commerce experiences that transform logistics for our mutual customers around the world.”
Microsoft and FedEx will release more information about FedEx Surround availability this summer, along with news of additional product launches, according to the release.