United States Postal Service: A Simpler Way to Ship

BUSINESS SITUATION

A Category Dominated By Two Aggressive Players

Businesses account for 95% of all expedited package shipping in the U.S. The category is dominated by two iconic brands: UPS and FedEx. Long considered the gold standards among business shippers, together they hold more than 86%1 market share. UPS and FedEx have created extremely high barriers to competition, with world-class customer service and on-time reliability, customized shipping computer software, and a comprehensive suite of pick-up and retail options (the latter through UPS Stores and FedEx Office, formerly Kinko's, locations). Promotional expenditures for the two outpaced the Postal Service by a margin of more than 7 to 12 in 2008.

As an example of just how difficult it is to make profitable inroads against these two juggernauts, following five years of operational and infrastructure investment (including over $260 million in advertising spend2), DHL discontinued U.S. domestic operations in early 2009.