Ups Drone Service Delivery Competition Is Stark Within The P
12ups Drone Service Deliverycompetition Is Stark Within The Parcel Del
UPS Drone Service Delivery Competition is stark within the parcel delivery sector. As such it is critical that continued advancements of goods and services are sought after and achieved by providers. In an effort to foster continued satisfaction of their customer base and advancement of the company, UPS has taken steps to evolve as a company.
Background
The United Parcel Service (UPS) is the world’s largest package delivery company, offering superior supply chain management solutions to a broad international clientele. Headquartered in Sandy Springs, Georgia, UPS delivers over 15 million packages daily to approximately 6 million customers in more than 220 countries. It operates its own air cargo and airline services based in Louisville, Kentucky, to expedite transportation from origin to destination.
Known as "Brown" by Americans due to its uniforms and vehicles, UPS operates across three main segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic segment handles time-sensitive deliveries within the U.S., while the International segment manages shipments globally, including those originating from or destined for the U.S. The Supply Chain & Freight segment deals with logistics, forwarding, and freight services, encompassing contract logistics and customs brokerage activities (Kerin et al., 2015).
Product Details
UPS aims to revolutionize its delivery systems through the development and deployment of drone technology, driven by increasing customer demand, environmental regulations, and technological advances. Incorporating drones promises faster, more efficient delivery, especially critical during peak periods such as holidays when traditional logistics face delays due to high volume and adverse weather conditions.
The drone system is anticipated to not only improve delivery speed but expand reach to rural and hard-to-access areas. Research by Ferrier (2016) indicates that rural consumers engage in online shopping three times more frequently than metropolitan residents, representing an untapped market for efficient delivery. The integration of drones can thus promote market expansion, competitiveness, and environmental sustainability by reducing reliance on traditional transport modes (Fleisher & Bensoussan, 2015).
SWOT Analysis of UPS Drone Delivery Service
Strengths
- On-time, efficient deliveries
- High quality, cost-effective, reliable service
- Limited competition initially, providing a market advantage
- Rapid local delivery capabilities
- High barriers to entry due to substantial investment requirements
Weaknesses
- Weather-dependent operational challenges
- Potential theft and vandalism of drones
- Limited operational range and communication issues
- Hazards associated with landing in inappropriate or hazardous locations
Opportunities
- Expansion of new service offerings utilizing drone capabilities
- Growth in customer base through faster delivery
- Partnerships with drone manufacturing companies
Threats
- Growing competition from companies like Amazon and FedEx
- Potential regulatory restrictions and government policies
- Emergence of new delivery technologies or substitutes
- Entry of new competitors leveraging drone technology
Competitive Analysis
In the fiercely competitive logistics landscape, UPS differentiates itself through its emphasis on reliable, cost-effective services. Competitors such as FedEx and USPS primarily compete on speed and cost, with FedEx focusing on expedited delivery and USPS on affordability for lighter shipments (Kerin et al., 2015). UPS’s adoption of drone technology can serve as a differentiator by enabling faster, more flexible deliveries, thereby attracting tech-savvy, time-sensitive customers.
UPS’s strategic positioning emphasizes cost leadership while exploring differentiation through technological innovation. This enables the company to maintain its leadership in logistics—especially when competitors introduce similar drone services, as Amazon has been actively developing (Moon, 2016). Recognizing this, UPS’s investment in drone technology aims to preempt competitive threats and secure a larger market share.
Target Market Segments
Demographic
The primary demographic targeted for UPS’s drone delivery service comprises working professionals aged 25–55, predominantly residing in major urban centers such as New York, Los Angeles, Houston, Nashville, Phoenix, Atlanta, and Chicago. Typically, these consumers are single or married without children, leading fast-paced lifestyles and valuing time-savings. Their higher incomes make them willing to pay premium prices for expedited and reliable delivery services (Gitman & Zutter, 2014).
Psychographic
Consumers interested in innovative, cutting-edge services—generally early adopters or “innovators”—are the main psychographic target. These individuals prefer the newest technology and are inclined towards premium, convenient services. As Gitman and Zutter (2014) note, these consumers’ lifestyles align with a desire for exclusivity and efficiency, making them more receptive to adopting drone delivery based on social proof when observing peers or colleagues using the service.
Geographic
The service focus is on densely populated urban and suburban areas where the demand for rapid delivery is highest. Rural towns, despite potential market opportunities, are less likely to benefit initially due to logistical constraints and lower consumer demand for rapid deliveries. The service’s success depends heavily on proximity to operational hubs, with prioritized coverage in major cities where population density supports volume and profitability.
Behavioral Factors
Target consumers demonstrate impulsive buying behavior and high-profile occupational traits, favoring premium service options. This behavioral trait justifies the higher shipping costs associated with drone deliveries, aligning with their preference for convenience and speed. The service appeals to those valuing time over cost and willing to pay for guaranteed delivery timelines (Kerin et al., 2015).
Positioning Statement
UPS’s drone delivery system is positioned as an innovative, fast, and reliable solution that guarantees the quickest delivery times across the United States, ensuring parcels arrive in pristine condition via unmanned aerial vehicles in record time. This service sets UPS apart from competitors, emphasizing efficiency, environmental benefits, and customer convenience.
Conclusion
The evolution of parcel delivery into advanced drone systems presents a significant strategic opportunity for UPS. As drone technology matures, it offers unprecedented advantages in speed, access, and environmental sustainability. By pioneering this technology, UPS can differentiate itself as a leader in logistics innovation, attracting and retaining customers eager for cutting-edge services. Embracing drones not only meets current customer demands but positions UPS for future growth in an increasingly digital and environmentally conscious marketplace.
References
- Ferrier, S. (2016, Feb 15). Australia Post to trial drone parcel delivery of online shopping. ABC News. Retrieved from https://abc.net.au
- Fleisher, C. S., & Bensoussan, B. E. (2015). Business and Competitive Analysis: Effective Application of New and Classic. FT Press.
- Gitman, L. J., & Zutter, C. J. (2014). Principles of Managerial Finance (14th ed.). Pearson Education.
- Kerin, R. A., Hartley, S. W., & Rudelius, W. (2015). Marketing (12th ed.). McGraw-Hill Education.
- Moon, M. (2016, Mar 25). Nevada gets first FAA-approved urban drone delivery. Engadget. Retrieved from https://engadget.com
- Pandit, V., & Poojari, A. (2014). A Study on Amazon Prime Air for Feasibility and Profitability. IOSR Journal of Business and Management, 16(11), 6-11.
- Risen, T. (2013, Dec 26). UPS Gifts Delayed by Snow, Online Orders. U.S. News & World Report. Retrieved from https://usnews.com
- Savillezo, M. (2016). Competitive Analysis. Types of Competition in Business. Retrieved from https://businessstudies.com
- Treacy, M. (2013, Dec 11). Amazon Drones: A Look at the Pros and Cons. Treehugger. Retrieved from https://treehugger.com