United Parcel Service Inc. is exploring a same-day option, a delivery model that has been widely used by gigsplayers as the Pandemic has accelerated the shift to e-commerce.
We don't have a same-day product today, so we're looking at it, Chief Executive Carol Tom said in response to a question on an investor-day webcast Wednesday. We don't know everything is figured out, but we have a team of people looking at it.
She said that the company is testing the concept and did not give other details. A UPS spokesman said that the company did not comment on its pilot programs. The idea comes as the acceleration of e-commerce has pushed retailers to add more delivery options along curbside and same-day delivery options.
Instacart Inc. one of UPS' biggest customers and Amazon.com Inc. are among the various delivery providers of same-day delivery. Shipt owns Target Corp., which manages same day deliveries from its stores as well as from brands like CVS and Petco. They were extended to food delivery services like Uber Technologies Inc. and DoorDash Inc. during the pandemic, though the profits have been elusive.
UPS and rival FedEx Corp. have long delivered services, but generally don’t deliver packages on the same day they are received. Both companies have started to offer services that they deliver parcels from some supermarkets in the evenings and pick them up the next day. FedEx provides limited services in same-day markets. It has also tried robots that could make deliveries of medicine, pizzas and other items to consumers' homes.
The UPS infrastructure for ordering and tracking packages would position it well to pursue the Delivery model, though it is unlikely that the company would go after already-popular services such as grocery or meal delivery, said Jeffrey Kauffman, a Transportation and Logistics analyst at Vertical Research Partners LLC.
The e-commerce market will continue to grow, Mr Kauffman said of the market for same-day services. It is a market worth knowing more about.
UPS on Wednesday put out some financial targets, saying it expects revenue to rise to about $98 billion for 2023 but it puts profit margin goals that were below some Wall Street projections. UPS had an operating profit of $ $7.68 billion in 2020 on revenues of $84.63 billion.
UPS shares fell 4% in Wednesday trading. The stock has roughly doubled over the past 12 months.
Ms. Tom, who stepped into control as CEO a year ago, has adopted a strategy of becoming more selective about the packages the company accepts, as well as dropping prices and enforcing volume limitations.
UPS said Wednesday that it depends on deliveries of small packages and the early growth among midsize businesses.