Dive Brief:
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Shipping giant UPS plans to test Saturday home delivery this summer in a handful of markets, including Atlanta, Philadelphia and Los Angeles, to find out if the volume of shipments it can deliver on Saturdays would make up for the cost of adding an extra day to its weekly home delivery schedule.
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UPS, which realized $343 billion in U.S. e-commerce sales in 2015, is busily revamping its delivery programs amid the rise of flexible shipping offers, such as same-day delivery.
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UPS earns more per package on home deliveries, a segment which may account for more than 50% of its total deliveries by 2019. However, the shipper also averages only 1.2 parcels per residential stop, compared with 3.6 at each business, according to consultancy ShipMatrix.
Dive Insight:
This move is all about a shipping industry incumbent looking to keep up with a rapidly changing sector, as exemplified by the emergence of Amazon's Prime two-day, single-day and Prime Now same-day delivery offerings.
While UPS has a large and growing piece of Amazon's shipping business, it also has become clear that Amazon will use any means necessary to assure timely and reliable delivery of packages to its customers. Those means includes not only UPS, but other shippers, like the U.S. Postal Service, and increasingly Amazon's own delivery fleet.
This change is not at all lost on UPS, and the company has been making some interesting strides recently to adapt to the changing market. For example, it has steadily expanded its Access Point Smart Locker pick-up program for customers that prefer to scoop up their packages at convenient locations near their homes, rather than have them delivered to their residences.
Concerning the potential for Saturday deliveries from UPS, the company would be a latecomer to that particular arena, as the postal service and Federal Express already make weekend home deliveries. But UPS has to do its due diligence and make sure it makes economic sense before it goes much further with the idea. Failing to match competitors on certain points may be bad, but losing money while trying to adapt is no fun either.
