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Business Model And Strategy Comparison Of Us Logistics And Express Companies: UPS Vs. FedEX
Kinghood International Logistics Inc | Updated: Jan 02, 2019

UPS and FedEX are two of the top us logistics companies, and rivals in the public eye.On closer examination, however, their business models and strategies are quite different.

UPS is mainly a ground parcel delivery service in the us, while FedEX is better at air freight service worldwide.Moreover, the two companies differ in terms of customer service, e-commerce business performance and business structure.

Package delivery vs. express mail

Parcel delivery and express mail are the two companies that make their mark.

While there seems to be a lot of overlap between the two businesses -- UPS also offers air freight and FedEX offers a UPS Ground delivery service -- Ground delivery is the core of UPS and air freight is the core of FedEX's business.

UPS delivers packages around the world every day (except Sunday).In 2017, UPS delivered 20m packages and documents a day, compared with about 5.1bn that year -- a figure unmatched in the us.For FedEX, half of its revenue comes from 6 million airmail deliveries a day to 220 countries and regions.

As for the business model, their positioning is also different. UPS focuses on small package delivery, while FedEX focuses on time-sensitive delivery services.

UPS specialty store vs. FexEX office

In terms of physical stores, UPS USES the "specialty store model", while FedEX is more like "office", which is also a different business model: although both provide customers with express delivery, packaging and some services like printing and photocopying, they attract different groups of consumers.

UPS stores are generally small in size and are usually franchised. They provide services for retail customers and small enterprises, mainly for the express delivery of small packages, as well as some postal and shipping related services.

FedEX's office is larger, more like a large office, and company-owned.FedEX offices can offer more sophisticated devices -- such as digital photo booths, laser printers, desktops with scanners and Adobe software.As a result, FedEX appeals primarily to retail and enterprise customers who prefer and can afford the service.

Three, the impact of e-commerce is completely different

With the continuous development of e-commerce business, it has completely entered the core business of UPS -- that is, small package delivery.As more and more consumers start to shop online, and a good experience means faster delivery, merchants will be under great pressure to deliver goods -- they will regard logistics as an important part of retail success, after all, most enterprises will eventually connect with consumers through UPS.Therefore, for UPS, despite the continuous increase in freight volume, it is also faced with great operational pressure during the busy season.

For FedEX, however, the ecommerce boom has had less of an impact, as its overland Express business generates only half as much revenue as its core business: $18.4bn in fiscal 2018, compared with $36.2bn for its core business.

What e-commerce businesses really need is ordinary local or regional express delivery, rather than FedEX's express delivery service.E-commerce enterprises prefer to deliver goods through local or local Fulfilment Center and physical stores, which can save time and cost.Thus, FedEX's advantages are actually of little use in the current e-commerce field.

Iv. Single network vs independent operation

In terms of operational structure, UPS and FedEX are totally different.

All UPS businesses -- air, land, domestic, international, and so on -- are managed using a single transceiver network.This Single Network Structure enables UPS to form a competitive advantage by maximizing Network efficiency and asset utilization.FedEX's strategy of operating separate Business units, with 96 per cent of its customers using two or more services, gives it a new competitive advantage.

FedEX's single-network strategy, similar to UPS's, won't work because it has different businesses (express delivery and regular land).At the heart of UPS are small packages, where a single network works -- in other words, FedEX is broken up from a business perspective, and UPS is broken up from a package perspective.

So, the most interesting thing is that, from a business perspective, UPS and FedEX are very different, and in the eyes of consumers, they are almost the same.

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