UPS to Drop Some Discounts, Uber Looks to Upend Delivery Industry
As the United Parcel Service does away with some of its big discounts for oversized items, Uber tries to do for the delivery business what it’s done for the people-moving business.
United Parcel Service
Many online retailers thrive on promises of free shipping, but the delivery titan has been inundated with oversized items, especially around the holidays, many of which don’t fit on UPS’s conveyor belt systems.
Thus, oversized items must be hand loaded on delivery trucks, where the bulky items reduce space for other items and often have to be wrestled up doorsteps or even flights of stairs by delivery drivers when they reach the intended destination, all of which drive up costs and reduce efficiencies, notes the Wall Street Journal.
So, UPS is doing away with discounts on packages of more than 130 inches in combined length and width through the holidays and permanently for some retailers.
Unwieldy items meeting the 130-inch criterion will incur an automatic $57.50 flat fee for, according to UPS, which is headquartered in Sandy Springs, Ga., forcing retailers to eat the extra cost, pass it along or meet in the middle.
The move by UPS could put a dent in online sales in 2015 as consumers balk at the extra cost for shipping while providing an unexpected boon to brick-and-mortar stores as some trade the convenience of home delivery with in-person shopping to avoid skyrocketing shipping fees.
Uber Dropping In
In another Wall Street Journal piece, the headline writer asks, “The $50 Billion Question: Can Uber Deliver?”
Uber has been trying for the past year to include same-day delivery for things like groceries and packages into its model, but unlike its speedy transport of people between destinations in more than 300 cities, the startup’s other delivery business is stuck in mud.
But many investors back San Francisco-based Uber’s potential for adding a smartphone-based same-day delivery to its offerings.
Case in point, the Wall Street Journal points to a valuation of $41 billion for Uber during the last round of funding and cites unnamed sources saying the company is in negotiations to raise $50 billion in a new funding round.
By comparison FedEx Corporation’s total stock market value is around $50 billion.
Investors also like that 200,000 active Uber drivers represent a potential delivery force nearly double that of UPS.
Over the past year, talks between Uber and Apple Inc., Starbucks Corp. and other companies to deliver their products or products on their behalf have faltered in one way or another notes the Wall Street Journal. The newspaper does, however, acknowledge that Uber has secured deals with six companies to deliver their products.
Quite possibly, when the holidays roll around, it won’t be Santa or a guy in brown but someone in a Chevy Malibu pulling up curbside, ringing the doorbell and dropping off a large oversized flat box with an unassembled bird cage and stand inside.