This is a preview of a research report from Business Insider Intelligence, Business Insider’s premium research service. To learn more about Business Insider Intelligence, click here. Current subscribers can log in and read the report here.
Outside of the US Postal Service (USPS), FedEx and UPS have dominated the domestic logistics industry — and in particular, the last mile of delivery — for decades. On a quarterly earnings call in 2016, FedEx estimated that itself, UPS, and USPS executed a whopping 95% of all e-commerce orders.
But rapidly rising volumes have put the pair of legacy shippers in a bind. E-commerce sales have risen over 50% since 2014 and are projected to continue their ascent into the next decade. High volumes are already straining shippers’ networks — UPS struggled to bring consumers their parcels on time due to higher-than-anticipated package volume, which upset some big-name retail partners, including Macy’s, Walmart, and Amazon. As online sales surge further, package volumes will outstrip legacy shippers’ capacities, creating space for new entrants.
Amazon presents the biggest near-term threat to UPS and FedEx’s duopoly due to its size, strategic position in the e-commerce market, and wealth of logistics infrastructure. DHL is reentering the market after a 10-year absence, but it still has dozens of warehouses across the US that it can utilize to support its delivery network. The company also recently spent millions to update its warehouses, which will help it quickly get parcels in and out the door. And ride-hailing giant Uber — which unsuccessfully tried to offer a last-mile service known as UberRush — is a threat to UPS and FedEx if it can learn from the mistakes it made with Rush. Lastly, crowdsourced delivery startup Postmates, which operates a similar model to Uber, but for deliveries, could threaten UPS and FedEx if it can tackle the challenge of handling grocery and parcel deliveries.
In The Delivery Challenger Report, Business Insider Intelligence identifies the four companies that pose the largest threats to UPS and FedEx’s duopoly in the US last-mile delivery market. We then unpack the strengths each of these players could bring to the last-mile delivery space. Lastly, we outline concrete steps each of them must take if they hope to maximize their footprint in the market and peel away business from UPS and FedEx.
The companies mentioned in this report include: Alibaba, Amazon, Deliv, DHL, FedEx, Postmates, Uber, UPS, USPS, and Postmates.
Here are some of the key takeaways from the report:
- The rapid surge in online retail sales is creating significantly more volume than UPS and FedEx can handle. Last holiday season, for instance, UPS dealt with shipping delays in its network, upsetting several high-volume retailers.
- Amazon, DHL, Uber, and Postmates are best positioned to step in and swallow up this excess volume, ultimately threatening the duopoly.
- Amazon, Uber, and Postmates need to expand their crowdsourced delivery offerings since they require lower labor costs than FedEx’s and UPS’s operating models.
- For Amazon, in particular, that must involve offering merchant partners lower shipping rates than UPS and FedEx — one-third of US online retailers would consider switching to an Amazon delivery service if it offered at least 20% lower shipping rates.
In full, the report:
- Explains how the steady rise in e-commerce is opening up cracks in UPS and FedEx’s grip on the last-mile delivery market in the US.
- Outlines the strengths that each of these companies could bring to the last-mile delivery space, ranging from lower operating costs to innovative, cheaper new delivery methods.
- Lays out concrete actions each company must take if they want to take down or dent UPS and FedEx’s dominant share of the domestic last-mile delivery space.
- Paints a picture of the type of threat each company poses to UPS and FedEx’s duopoly, including whether it’s a near- or long-term threat.
Interested in getting the full report? Here are two ways to access it:
- Purchase & download the full report from our research store. >> Purchase & Download Now
- Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of delivery challengers.
Powered by WPeMatico