Thus it exemplifies a company's migration from the technology strategy through the service strategy to the market strategy of the B2C e-strategic grid" (132). These authors suggest that these it-based initiatives were primarily responsible for the company's ability to promote its services and grow its market share far more rapidly than its main competitor: "By focusing on building profitable market share, UPS is now able to deliver 12.4 million packages a day around the world and handle 55% of all e-commerce shipments, compared with rival FedEx's 10%. Facilitating those shipments are 2,500 distribution centers, more than 330,000 employees, and 500 airplanes. Smart use of Web technology also has enabled UPS to reinvent itself as an information-delivery company and problem solver" (emphasis added) (Brynjolfsson and Urban 132). According to UPS President Jim Kelly: "UPS does business where the virtual and physical worlds meet, where 'tires and wires' converge"; however, this was not always the case. For instance, Brynjolfsson and Urban (2001) report that the company was already trailing behind its major competitor in its use of information technology to further the company's goals. "UPS brought in Web technologies in the mid-1990s," they advise, "but at that time FedEx, with its package-tracking system, led in its use of the Web for customer service. By 1998, however, UPS was catching up in building its technology infrastructure" (132). These authors also report that in 2000, UPS invested $1 billion on marketing efforts designed to identify equivalents or close approximations for what its competitors were offering, but managed to pull its corporate feet out of the fire by using Internet-based technologies to help target its market more efficiently (Brynjolfsson and Urban 132). In this regard, Brynjolfsson and Urban suggest that, "The challenge over time is to continually differentiate the offering -- and to make it less price-sensitive -- in ways that remain attractive to the targeted market segment" (132). This is precisely what UPS has attempted to do with its it-based marketing initiatives, and the company has reaped a large return on its investments to date.
Because many of the products and services offered by UPS and FedEx are virtually fungible, the savvy marketers at UPS quickly recognized the it provided them with the ability to personalize services and deliver their message more effectively. According to Brynjolfsson and Urban, "The support dimension of an offering represents those differentiating features that help customers choose, obtain, and then use the offering. All other differentiating features belong to what is called the merchandise dimension. The support features of a car sold over the Web include availability of information, ease of purchase, the test-drive, promptness of delivery, and service arrangements. Companies can augment the support dimension through personalization" (Brynjolfsson & Urban 132).
Despite these initiatives and other aggressive marketing efforts by UPS, the marketing proof is in the bottom-line pudding, so to speak, and a comparison of FedEx's and UPS's respective stock performance for the past five years to date suggests that FedEx is clearly doing something better than UPS as shown in Figure 1 below.
Figure 1. Stock Performance of UPS vs. FedEx: Past Five Years to Date.
Source: Yahoo! Finance, 2007.
A similar comparison after the 2007 holiday season will be revealing as well.
The research showed that two of the leading competitors in the Air Delivery and Freight Services industry today are FedEx and UPS. The research also showed that both companies have gained additional market share in an increasingly globalized marketplace through their reliance on information technology-based initiatives, with both UPS and FedEx investing in an extensive online presence for their various business segments. In the final analysis, it would be reasonable to suggest that both of these companies are going to be around for awhile, and both will continue their reliance on the Internet and information technology to grow their businesses around the world.
Brynjolfsson, Erik and Glen L. Urban. Strategies for E-Business Success. San Francisco: Jossey- Bass, 2001.