Amazon recently announced that they will be providing their own shipping services. These shipping services will start only in Los Angeles and for companies that sell merchandise through Amazon’s website. However, as Amazon’s shipping services move forward, they are expected to vie with UPS and FedEx.
What can these two companies do to make sure they don’t get overtaken by Amazon?
Here are some ways UPS and FedEx can innovate and keep their services relevant.
Highlight Cost Differences
While free shipping services through Amazon may provide convenience for some agencies, experts project that Amazon still won’t be able to compete with the low costs of traditional carriers like FedEx and UPS.
Merchants opting to fulfill through Amazon can expect increases in cost. One way costs have already increased is through the price of membership. Membership prices increased in January from $10.99 a month to $12.99 a month, and they may see other increases in fees in 2018, experts say.
Traditional carriers can stay competitive by highlighting the costs differences. If it makes financial sense for merchants to keep shipping with FedEx and UPS, they will.
Focus on All Revenue Streams
FedEx and UPS report e-commerce is important for their revenue growth, but their growth isn’t dependent on any single e-commerce business. In fact, only 3% of FedEx’s revenues and 7% of UPS’s revenue come from Amazon purchases.
FedEx and UPS may lose some business to Amazon, but a majority of their e-commerce revenue streams will remain unaffected. Whatsmore, they can look at past data to make future predictions about where they will see an increase in revenue streams.
Similarly, experts report that outside the US, FedEx and UPS have very limited competition. UPS and FedEx can work to put more stock in their global business to stay on top.
Improve the Customer Experience
Another way FedEx and UPS can stay ahead of the game is by investing in data-driven customer experience initiatives. By collecting data on their target market, asking for feedback, and keeping up with customer experience trends, UPS and FedEx can learn exactly what their customers want and need. Then, they can implement measures to make their customer experience stand out in the market.
FedEx and UPS may see some loss with the advent of Amazon’s new shipping services, but most likely won’t be put out of business. They can stay competitive by focusing on price differences, catering to all their revenue streams, and using data-driven market research to improving their customer experience strategies.