Uber latest! Would the package delivery market be a step too far?

Too far, too fast?  In the US, Uber are eyeing the package delivery service, but the feeling is, they could come seriously unstuck.

CNN Money reports:  “In the past few years, Uber has dramatically upended the taxi business with its cheaper, crowd-sourced alternative to traditional cabs. Its success and rapid growth in this field have scored Uber a $41 billion (and rising) valuation.borisdave8More recently, Uber has looked to expand into adjacent markets. If it has thousands of drivers in a big city ready to transport customers from point A to point B at all times, why not have them transport packages, too? That’s exactly what Uber is trying to do.”

FedEx isn’t losing any sleep over the Uber challenge, and here’s why:

“Package delivery is tough: In a conference call with analysts last month, Mike Glenn, FedEx’s executive vice president of market development and corporate communications, gave two main reasons why upstart delivery services like Uber won’t eat UPS’ and FedEx’s lunch.

The first is simply that operating a reliable, efficient package delivery network is tough. (FedEx has been spending upwards of $4 billion a year in capital expenditures to keep its business competitive and growing.) In addition to the big overhead costs, massive scale is needed to be cost-effective.

Crowd-sourced delivery won’t work: To look at it another way, the package delivery business is highly organized. FedEx and UPS drivers have routes that are optimized to get packages between customers and sorting hubs as efficiently as possible. A crowd-sourced delivery service would have trouble replicating that, since companies like Uber generally don’t determine who takes what job.

People trust the uniform: Aside from these significant logistical issues, FedEx also claimed that research has shown that “a uniformed person with proper identification showing up at your doorstep is an important issue for customers.” Presumably that would apply at least equally to the people or businesses sending out packages.

If a significant number of customers would be uncomfortable about sending or receiving a delivery via a non-uniformed Uber driver in an unmarked car, it could be a major barrier to services like Uber gaining a foothold in package delivery. At the very least, retailers offering Uber deliveries might also need to give customers an alternative delivery option.

Meanwhile, in the UK, Boris Johnson is thanking his lucky stars we don’t have UberPop!   The feeling among black cab drivers is that if David Cameron has influenced the Uber issue, he owes it to  black cab drivers to explain the angle he is playing. Their entire livelihoods are dependent on his answer.

One response to “Uber latest! Would the package delivery market be a step too far?

  1. Uber overreaching! Going too far, too fast!

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