Leadership often made it clear that Amazon was right at that limit, and wanted to send a lot more volume, but FedEx wouldn't let them, in order to maintain "independence."
To your point: it didn’t stop them from working to cater to Amazon’s every whim, and it did provide Amazon the incentive to build a (better and more cost-effective) fulfillment and shipping network themselves.
I don’t know what the “right” play was, and obviously the story is far from over. But FedEx always seemed to me like they chose the worst of both worlds.
TSMC uses Apple as their first-and-best customer for their bleeding edge chips, using fat stacks of iPhone cash to push the limits of semiconductor technology.
Then they can keep selling chips built on that process for a decade or more (to a very long tail of other customers).
Nobody would say that TSMC isn't dependent on Apple! They're certainly tied very tightly. But they've turned that dependency into just the top of a very profitable funnel.
Over expanding to fullfil a single large customer who isn't actually reliant on you is a good way to end up bankrupt. Seems like FedEx made the right move here.
I read an article back in ~2006 that made a similar point [1]
If you're a lawnmower manufacturer and Wal-Mart comes to you and says they want to make you their main supplier of lawnmowers and they need X units per year (which will double your sales) that sounds like a great deal which will really grow your business - right?
But once you've built a second factory to deal with all this extra sales volume and hired a bunch of extra workers, if Wal-Mart decide that $250-retail-price lawnmower is going to cost them $20 less next year you can't walk away, because you've got to pay the loans you took out to build this new factory.
[1] https://www.fastcompany.com/54763/man-who-said-no-wal-mart
https://www.fastcompany.com/47593/wal-mart-you-dont-know
> The gallon jar reshaped Vlasic’s pickle business: It chewed up the profit margin of the business with Wal-Mart, and of pickles generally. Procurement had to scramble to find enough pickles to fill the gallons, but the volume gave Vlasic strong sales numbers, strong growth numbers, and a powerful place in the world of pickles at Wal-Mart. Which accounted for 30% of Vlasic’s business. But the company’s profits from pickles had shriveled 25% or more, Young says–millions of dollars.
> The gallon was hoisting Vlasic and hurting it at the same time.
> Young remembers begging Wal-Mart for relief. “They said, ‘No way,’ ” says Young. “We said we’ll increase the price”–even $3.49 would have helped tremendously–“and they said, ‘If you do that, all the other products of yours we buy, we’ll stop buying.’ It was a clear threat.” Hunn recalls things a little differently, if just as ominously: “They said, ‘We want the $2.97 gallon of pickles. If you don’t do it, we’ll see if someone else might.’ I knew our competitors were saying to Wal-Mart, ‘We’ll do the $2.97 gallons if you give us your other business.’ ” Wal-Mart’s business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level.
> Finally, Wal-Mart let Vlasic up for air. “The Wal-Mart guy’s response was classic,” Young recalls. “He said, ‘Well, we’ve done to pickles what we did to orange juice. We’ve killed it. We can back off.’ ” Vlasic got to take it down to just over half a gallon of pickles, for $2.79. Not long after that, in January 2001, Vlasic filed for bankruptcy–although the gallon jar of pickles, everyone agrees, wasn’t a critical factor.