FedEx And UPS Threatened By New E-Commerce Solutions And Same-Day Delivery
Wednesday, July 31, 2013 at 9:58AM 
E-Commerce is growing bigger and having more impact on the way we do business each year. Because of its’ 16% annual growth, more companies are focusing in on innovative business strategies to meet the demand e-commerce creates, especially relative to shipping. Major e-retailers are even implementing optimal package delivery services themselves, which is keeping shipping giants like Fedex and UPS out of the loop.
Reuters reported Fedex and UPS have new threats in regards to e-commerce and may indeed need to pay attention to what is happening in the industry in the US. E-Retail leaders are not depending on Fedex and UPS like they use to. They are actually creating various delivery solutions, such as building warehouses in various locations close enough to fulfill their own deliveries. Amazon is aggressively implementing this same model, building distribution centers closer and closer to its’ customers. It equates to saving millions in shipping costs. The company has also increased usage of its’ own delivery trucks.
Global retailer Wal-Mart is making its’ own moves in the e-commerce arena as well. Instead of fulfilling online orders from its’ warehouses hundreds of miles away, Wal-Mart is simply shipping directly from local stores closest to the customer. The article stated Wal-Mart has being doing this for years and has now decided to increase their online store shipping program to 50 locations. This is double the amount it already has. "We are at least two zones closer by utilizing the stores," Anderson said. "The closer we can inject the order into our network, the more this saves the customer time and reduces what it will cost us to get it to the customer."
Wal-Mart is even testing same-day delivery to its’ shoppers in various cities nationwide. Other retailers such as Macy’s, BestBuy, and Target are taking the same delivery course, pursuing to keep their sales up at their brick-and-mortar stores. M-Commerce, or Mobile-Commerce, via ipads, tablets, etc., is playing a role in the increase of online sales. This has ultimately fueled the revenue for e-retailers to where it now makes sense to invest and deliver themselves. Fedex and UPS are essentially being cut out of the picture.
"UPS and FedEx are not only watching this, they are likely concerned about it. Big companies like Amazon and Wal-Mart will dictate which direction this goes. Those are the companies that FedEx and UPS need to fill their planes and trucks,” said Lou Tapper, an executive at third-party logistics company Longistics and former FedEx employee for 18 years. In the past, the increase in e-commerce sales would have been more guaranteed revenue for FedEx and UPS. This is not the case anymore.
E-Retailers are now seeking to get their online orders delivered faster than what Fedex and UPS can offer. Same-day couriers like A-1 Express being partnered with to develop courier logistic solutions to make their delivery systems work. This Portland Courier has a national footprint and the courier expertise to keep up with the growth of e-commerce.
Reference: 7.14.13, Reuters, Alistair Barr, Analysis: New e-commerce strategies threaten UPS, FedEx
Reader Comments (2)
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