1) How and why has the structure of the express mail industry evolved in recent years? How have the changes affected the small competitors? How has the rivalry between FedEx and UPS impacted them and the rest of the industry?
- The face of shipment industry changed drastically with the proliferation of many services wherein companies offered next afternoon delivery, second day services, third day deliveries and pricing these options on the basis of delivery time.
- Shipping volumes had increased by 15-20% over a decade
- Companies tailored their activities for their business customers e.g. Airborne customizing those for Xerox
- High discounts from list prices of 50% were common. These discounts were based on volume, and encouraged customers to focus on one carrier. This ensured competition in the market, and better services for the customers.
- Companies maintained a fleet of vans and drivers, and invested in aircrafts.
There was a central hub that was the key factor in overnight shipment deliveries.
All this started around 1973, Fedex commenced service in the express mail delivery services - Being the first of its kind. It shipped 186 packages to and from 25 cities. It revolutionized the express mail segment in the following ways
- A complex technological network to expedite mail deliveries
- Cutting edge offering to customers in terms of internet-online tracking
- Widely recognized for quality improvement efforts, satisfied customers, tracked performance of call centers, aggressive marketing, 1100 sales representatives to canvas business customers and a money back guarantee
- Good to work for... promoted people, no layoff policy, cross trained employees, extensive training programs, Employees with more decision powers - refund upto $2000 without management approval, expected employees to take risks and resolve problems on their own
FedEx and UPS have been the 2 big guerillas...