Electronic commerce advantages for FedEx and UPS

Business Information Systems

Advantages Internet Electronic Commerce

The Internet has much to offer companies like FedEx and UPS. More and more businesses like FedEx and UPS are realizing the long-term advantages and benefits they stand to gain from engaging in electronic commerce. For one companies like these can handle scheduling, shipping and tracking all using the World Wide Web. E-commerce offers businesses several unique advantage, none the least of which is the ability to offer services to customers around the globe 24 hours every day of the week (Kundu, 679).

By setting up a website an organization like FedEx or UPS allows corporations to easily attract and sell customers while the customer need only order from the comfort of their home. Businesses can use the Internet to generate data regarding customer buying patterns, visits and other vital statistics that will provide valuable insight into their offerings and structure (Nash, 64). Market research is also easily accomplished with the use of a website (Nash, 64; Epstein, 50). Of course to make this process successful both FedEx and UPS have to not only attract traffic but also convert them into paying customers. Fortunately with the right website and information this is usually very easy.

Establishing a web presence is increasingly important in modern society. More and more consumers are looking to the web to complete transactions and buy products and services rather than rely on traditional retail outlets. Thus any corporation including FedEx or UPS that takes advantage of this increasing interest is going to expand its market segment and improve its customer service, in part because it is filling a customer need. That need is to complete transactions in a timely and efficient manner from the convenience of one's home. One may even argue that not having a computer e-commerce presence may harm a business by reducing its market segment and reducing the level of customer service it is offering its customers (Epstein, 70). Establishing a web presence often requires a little investment that pays for itself ten times over in many cases (Epstein, 70). FedEx and UPS are living proof of this, expanding their profit margin by billions since investing in e-commerce (Epstein, 70).

Working in an electronic commerce environment also enables paperless transactions, meaning FedEx and UPS can exchange services or goods with customers using electronic information rather than exchanging paper (Nash, 64). With the click of a button companies can also alter their market presence, merchandising tactics, pricing and even sales process. The Internet allows organizations to maximize their profit potential by enabling services to be customized to individual consumers.

Perhaps the last benefit is electronic commerce enables increasingly beneficial partnerships between multiple organizations. These partnerships can expand the company's basic business services and increase their market segment domestically and globally. Companies working together in partnership can also share relevant information including data sets, statistics and marketing information with one another much more easily when a company is taking advantage of technology.

How Internet Changing Business For UPS and FedEx

More and more corporations are turning toward e-commerce to stimulate business. The Internet is changing business for UPS and FedEx in many ways. Perhaps the most obvious way that the Internet is changing business for companies like this is it is making business transactions more efficient and easy to track. Paperless recording of transactions and report development are now the norm rather than the exception to the rule (Kundu, 67). Many companies utilizing e-commerce on the Internet "resemble network organizations in the form of interdependent coalitions of task or skill specialized entities: (Kundu, 679).

E-commerce corporations have many advantages over traditional only corporations. For one e-commerce business transactions enable "multinational accessibility" meaning anyone in the globe can access a corporations products and services (Kundu, 679). As an added benefit participating in e-business enable competition with domestic and global firms (Kundu, 679). Yet another benefit, corporations can use networks of partnerships strategically to grow and expand their business and enter new areas of the market, in part because partnerships enable more network resources, easier and more open accessibility, more "innovative entrepreneurship" and allow corporations to share information more efficiently and easily (Kundu, 679).

One of the key ways the Internet is changing business for UPS and FedEx is by allowing package tracking. Package tracking allows customers to track their package from the point of sending to the point of delivery using a corresponding tracking number (Jupitermedia, 2002). In addition to traditional tracking FedEx offers an API that allows interaction with the FedEx system (Jupitermedia, 2002). This allows better systems interface and allows programmers to work with the system more easily (Jupitermedia, 2002).

FedEx and UPS have a clear advantage over start up businesses interested in using the Internet. For one both FedEx and UPS have a long-standing reputation. These companies won't need to find what their markets are; they already know their targets (Nash, 64). To make e-commerce work for these companies each need simply position themselves in a manner best suited to attract traffic. Connecting to the market is easy once a company starts getting information out about their Web presence.

Compare Website Specifications of FedEx And UPS/Where One Has Advantages Over Other

UPS has the unique distinction of being the first to the Web with the ability to handle package scheduling and pickup at all stages of the delivery process. That means that customers can make payments online use the Website to check on the status of delivery, schedule a pickup or even calculate the rate it would cost to send a package. The current Web specifications at UPS include an IBM Mainframe and AS/400 scheduling system that churns out information easily understandable by consumers. Most of the web-based package tracking functions used by UPS and FedEx are virtually the same, with FedEx tracking roughly 13,000 packages every day compared with 10,000 by UPS (Nash, 64).

FedEx offers an international express mail option for global customers. Many feel UPS have an IT leadership position over FedEx in part because UPS has continually rolled out new services "while integrating acquisitions" by acquiring IT capabilities purchasing a small IT firm and integrating that into its IT solution (Epstein 15). UPS currently uses e-commerce as a means to provide total service to clients, offering full logistics services in addition to contracting ship goods (Epstein 48). UPS also formed a "wholly-owned subsidiary" named e-Ventures in 2000 which provides services for small to mid size e-commerce communities (Epstein 65).

Today both UPS and FedEx are considered leaders in the e-commerce postal service industry (Epstein 150). UPS has more of a market share then FedEx though in part because their technology incorporates more functionality in the realm of e-commerce at a moderate-speed than FedEx's "high-speed services" (Epstein, 151). FedEx and UPS both enlist outsourcing opportunities.

FedEx still has a lead over UPS because of its unique tracking system (Epstein 151). UPS however in 1999 created UPS Online Tools which enables shipment tracking without the use of proprietary software or system reconfigurations, edging the company above FedEx (Epstein 151). This service also includes "pick-up and drop-off coordination and cost calculations" (Wang 1).

FedEx has offered multiple services to enhance its delivery division of late including FedEx Custom Critical, which includes "quoting, scheduling, tracking, and mapping to its online shipping toolkit" (Epstein 153).

Ultimately FedEx and UPS offer similar specification with regard to their web capability. UPS has more of a market share at present and a bit of advantage over FedEx in part because their nonproprietary software is more functional and applicable to a diverse population of clients than FedEx. FedEx has increasingly worked to expand its customer base and market segment however, and despite perceived shortcomings may at some point in the near future catch up to its closest competitor.

Describe Management Challenges Posed By Electronic Commerce and Business On Internet With Reference To UPS and FedEx

With even the most essential Internet transactions and changes that technology brings, there are bound to be some challenges that managers must overcome. This has certainly been the case for UPS and FedEx. Electronic commerce has presented UPS and FedEx some unique challenges, but in many cases these companies have successfully overcome the challenges presented to them. This is one of the reasons FedEx and UPS remain on top of their game. One of the challenges faced by both FedEx and UPS is raising awareness of e-commerce capability and marketing products and services online. Key to UPS' success was overcoming the challenge that customers saw the company as primarily a shipper.

UPS' strategy involved repositioning the company so it was seen as "an information delivery company and problem solver" in addition to being a shipper (Epstein 152). UPS now offers online logistics and has done so for much longer than FedEx. Among the logistics tools used include tools that improve Web site function, help reduce costs and tools for improving customer service and handling payments for smaller retailers (Epstein 152). This portion of the business has since grown exponentially exceeding $1.4 billion in revenues.

Unlike UPS, FedEx's challenge has been "targeting nascent firms interested in setting up e-business" (Epstein 152). FedEx now offers Power Ship terminals in customer mailrooms and has done so since early 1988, which allow digital interaction (Epstein 152). FedEx was the first to market to allow tracking package capability though proprietary software was required. This is one obstacle FedEx managers had to overcome entering the e-commerce market. To help combat this FedEx began marketing and offering its proprietary software to "companies in syndication" which allowed other companies to integrate their software into their offerings and customize a tracking system (Epstein 152). Rather than charge a fee for this FedEx ensured profits by ensuring all shipments were made by FedEx (Werbach, 92).

Another obstacle faced by managers in FedEx is the speed FedEx typically guaranteed was not necessarily a priority in e-commerce particularly because it was not cost effective. Because of this FedEx began offering home delivery services to online shoppers, which afforded them more flexible delivery dates and lower rates (Junnarkar 1). FedEx also introduced the "MarketPlace" providing site users "one-click access to a number of its largest customers, including HP, LL Bean and Value America" (Epstein 153).

Still another challenges for managers are becoming familiar with new Internet technologies and resources. Managers and employees alike must become familiar with the capabilities e-commerce has to offer if the company is to benefit from e-commerce business transactions. User error can result in substantial losses and wasted investments at beset (Epstein, 153). Fortunately with adequate training most managers will be able to master the techniques and skills necessary to work within an e-commerce environment without having to spend a significant amount of time in training.

E-commerce has clearly benefited both companies. Creative partnerships are more likely when companies take advantage of e-commerce capability. In addition partnerships can help a company grow and explore greater opportunities. Both UPS and FedEx have enjoyed multiple partnerships and subsequently entered new areas of the e-commerce industry that have expanded their profit and market base (Epstein 153).

E-commerce not only creates new business for companies but also enables companies to positions themselves as facilitators, logistics providers and break out of stereotypical roles, which for UPS and FedEx meant breaking out of the role of primarily "shipper" and into the role of multi-service provider.

References:

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Junnarkar, S. (2000 -- June). "FedEx slows down to move at Internet speed," CNET

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Jupitermedia. (2002-Jan). "Weaving magic with regular expressions: Tracking FedEx and UPS Packages online." Ecommerce-guide.com. 14, October 205: http://www.ecommerce-guide.com/solutions/customer_relations/article.php/959641

Kundu, S. & Signh, N. (2002). "Explaining the growth of E-commerce corporations

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