UPS entry could even the same-day delivery playing field
UPS recently indicated that it is exploring a same-day delivery option at its Investor & Analyst Day event.
“We don’t have a same-day product today, as you know, and so we’re looking at it,” said CEO Carol Tomé in response to a question on emerging competitors at last week’s event.
She told analysts that same-day delivery for UPS “could be a network outside of our network, a different product, a different offering.” The logistics publication, FreightWaves, assumed that meant the use of contractors.
“We don’t have this all-the-way figured out, but we’ve got a team of people looking at it. … I think there’s an opportunity there that will be very different than what we’ve done in the past,” said Ms. Tomé.
Same-day delivery received a boost during the pandemic, particularly as e-grocery sales took off. Instacart expanded to provide same-day options for Dick’s Sporting Goods, Bed Bath & Beyond, Sephora, 7-Eleven and other non-grocery channels.
Beyond Instacart, UPS would face same-day competition from DoorDash, Uber, and Target-owned Shipt. FedEx offers same-day services in limited markets. Amazon.com also continues to aggressively push its same-day options.
UPS has been raising prices and enforcing volume limits amid a heightened focus on profitable growth since Ms. Tomé took over as CEO last June. At its investor event, management laid out a three-year growth plan that focuses on SMBs (small and medium-sized businesses), healthcare and international.
Expanding Saturday and Sunday deliveries as well as last-mile delivery options are part of UPS’s goal to significantly increase market share with SMBs, and adding same-day delivery could further enhance offerings to the sector.
The company has forecast slower growth for enterprise clients, which include Amazon and other large e-commerce players that have traditionally offered lower margins. The refocus comes as Amazon has been increasingly managing its own deliveries as it builds out its logistics network.
Ms. Tomé stressed that UPS would be selective with customers in pursuing growth. “Not all packages are equal,” she said.
- UPS Explores Same-Day Delivery Option – The Wall Street Journal
- 2021 Investor & Analyst Day Webcast – UPS
- UPS mulling same-day delivery service with contracted drivers – Modern Shipper
- UPS zeroes in on most profitable packages to deliver – Atlanta Journal Constitution
- UPS Joins The Delivery War – PYMNTS
DISCUSSION QUESTIONS: How do you see same-day services — delivery and pickup — taking shape in retail over the next couple of years? How would a UPS same-day delivery service affect the shipping dynamic between the biggest retailers and SMBs in the U.S.?