Where is my package?

FedEx is one of only three enterprises that together deliver 95 percent of all e-commerce orders in the United States. Having as a center of their proposition facilitate the connection of people regardless of their location, their business model has been transformed during the years to enlarge the portfolio of transportation services to include e-commerce and e-business solutions as well.

One of the key components of the Christmas celebrations is the idea of exchanging gifts with the people we care, but every year having the presents ready and under the tree by the time the celebration starts seems like an extreme task. Just in 2013, the demand for delivery services on December 23th went up 13 percent compared to the previous year, making demand forecasting a difficult task for logistics and delivery services on such important and visible days for the customers. (1)

But demand forecasting on holiday season is not the only challenge those companies are facing, as more people make regular purchases online, retailers are pressured to find solutions to deliver goods on time to customers all year round and as clients have access to more information every day, they are starting to demand more transparency and better customer service at any given time. (2)

An exhibit of this trend is a market landscape elaborated by Barclays UK that shows how in 2013, products ordered online generated just over one billion deliveries and are expected to grow by 28.8% to reach 1.35 billion in 2018. (3)

deliveries-data

What is the value proposition of FedEx?

FedEx is one of only three enterprises that together deliver 95 percent of all e-commerce orders in the United States. Having as a center of their proposition facilitate the connection of people regardless of their location, their business model has been transformed during the years to enlarge the portfolio of transportation services to include e-commerce and e-business solutions as well. (4)

One of their new online key strategic goals is to deliver on the promise of being a reliable method to deliver an online product to consumers on time. To match the predicted increase in e-commerce shipments during the past years they have done great investments to expand their network capacity and with it move closer to the high demands the e-commerce industry requests.

Two examples of their commitment are the investment of FedEx Ground in automated hubs and the launch and renovation of their mobile and online platform systems. The operations on the hubs are designed to sort packages at a high rate, minimize handling and lower cost, while their e-tools have become an easy and fast way to access the global marketplace. Just the last November, FedEx reached a million packages per day processed online through fedex.com. (5)

 

What else can they do?

While the challenges to retain and obtain more B2C clients will continue, they could also focus on the final customer to deliver a best in class service that eventually will translate into more clients asking for a more reliable service during their online purchases when compared to others in the industry.

By creating the FedEx mobile app they have addressed some of the hassles that before the digital era were difficult to solve. For example, the options to manage their delivery specifications and sign for packages in advance have generated great perception on clients, but other features as the tracking option may lag on the quality of the information customers may be expecting. (5)

Today you can know in which part of the delivery process your package is located, but as it is becoming more common for e-commerce sites to provide higher visibility with real-time location, FedEx can jump to this trend that will add more transparency to the process meeting customer expectations of quality and reliability.

Another improvement to their current mobile application could be the communication between the involved parties. While today you can give special instructions for the delivery, such as where to leave the package at your home, real time communication with the delivery associate may result in a better customer experience when special instructions are not clearly stated or to facility real time approvals by phone when the customer are not at home and in advance signature was not provided.

As the e-commerce market evolves, at the same pace FedEx needs to question their customer promise and its implications in every part of their process, including the final customer expectations since quality perception and word-of-mouth approval are key for sustaining and expanding any customer base in this digital era. This continued iteration could not only facilitate introductions of technology and process improvements before other competitors but could also ensure that their innovation and investment efforts are aligned to their goals.

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  1. https://www.ft.com/content/0123be4c-1d78-11e4-8b03-00144feabdc0         http://usnews.nbcnews.com/_news/2013/12/25/22047875-ups-fedex-draw-fire-after-christmas-delivery-problems
  1. http://www.investopedia.com/articles/markets/120115/ups-vs-fedex-comparing-business-models-and-strategies.asp
  2. https://www.home.barclays/content/dam/barclayspublic/docs/BarclaysNews/2014/September/the-last-mile-report.pdf
  3. http://annualreport.van.fedex.com/2016/docs/FedEx_2016_Annual_Report.pdf                                                         http://about.van.fedex.com/our-story/overview/
  1. http://mobilesolutions.fedex.com/for-ios

Featured image: http://www.fedex.com/holiday/schedule/?noRedirect=true

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2 thoughts on “Where is my package?

  1. I would be interested in hearing your thoughts about Fedex’s digital strategy versus USPS’ digital strategy. It seems as if both organizations are focusing their digital efforts around data and analytics and monetizing these assets through applications or selling aggregated information to commercial customers. Your article references the importance of increased engagement with customers (while offering superior services such as tracking), but is Fedex better positioned to deliver on their digital innovation strategies, given their more attractive financial profile and more efficient logistics network or is USPS in a better position given its reach in every neighborhood in the United States? It seems where the U.S. Postal Service is focusing on are other ways to reach paying commercial customers through omni-channel marketing programs, where the USPS offers access and impressions to customers who wish to use the USPS digital platform to target specific customers. On the other hand, Fedex seems to focusing on supply chain optimization and maximizing the level of service they offer customers. I wonder if both strategies are truly that differentiated, and who is best positioned to win over the next decade. I included a think that discusses USPS’ strategy a little more.
    https://www.uspsoig.gov/document/riding-waves-postal-digital-innovation

  2. What an impact e-commerce has had on shipping! I would definitely be interested in seeing how FedEx/USPS/UPS continue to develop their customer communications.

    Another element of this changing business that I found very striking was how they have used technology to optimize routes to minimize fuel costs as well as environmental impact (http://annualreport.van.fedex.com/2016/docs/FedEx_2016_Annual_Report.pdf). I would be very interested in seeing how the relationship with shipping or receiving customers can further set up more efficient routes.

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