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UPS is quietly testing same-day delivery services to compete with gig economy players like Instacart and Shipt

Published by Business Insider on Wed, 09 Jun 2021


<p><img src="https://static4.businessinsider.com/image/60c0f9d68afda0001895d5aa-906/GettyImages-1286043643.jpg" border="0" alt="ups employee packages delivery" data-mce-source="Noam Galai/Getty Images"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>UPS is looking into providing same-day delivery service for retail packages, CEO Carol Tom said in a Wednesday investor presentation, which would make it a direct competitor in a space currently dominated by Amazon, Shipt, Instacart, and DoorDash.</p><p>"We don't have this all the way figured out, but we've got a team of people looking at it," Tom said.</p><p>As e-commerce delivery gets faster, retailers of all stripes have embraced same-day delivery. In the runup to peak holiday shopping season last year, UPS' network was maxed out and the company had begun <a href="https://www.businessinsider.com/ups-ceo-carol-tome-strategy-profits-over-package-volume-2021-2">capping customers' package volume</a>. At the time, <a href="https://www.supplychaindive.com/news/ups-domestic-shippers-parcel-peak-capacity-holidays/587925/">Tom encouraged retail customers to lean on alternatives</a> to UPS like "buy online, pickup in-store" models. Same-day gig delivery is another such alternative.&nbsp;</p><p>A traditional player like UPS getting into the same-day game could shake up a space currently populated by young, largely venture-backed players, and protect the package giant.&nbsp;</p><p>Analysts have warned that gig players are challenging UPS and FedEx for retail deliveries.&nbsp;</p><p>Morgan Stanley analyst Ravi Shanker told Insider said he has long believed that the rise of "ship from store" e-commerce strategies combined with various pickup programs and new options for last-mile delivery are a<a href="https://www.businessinsider.com/gig-economy-delivery-doordash-shipt-threaten-ups-and-fedex-2021-4"> threat to providers like UPS and FedEx.</a></p><p>Today, retailers can achieve two-day or next-day delivery using parcel carriers like UPS and FedEx. But to achieve same-day service, a courier model like the one used by most gig services is necessary.&nbsp;</p><p>Just this year, that trend has advanced. Gig-backed <a href="https://www.businessinsider.com/target-follows-amazon-with-e-commerce-logistics-investment-2021-3">companies like Target's Shipt </a>and <a href="https://www.businessinsider.com/meal-kit-delivery-startup-axlehire-takes-on-ups-and-fedex-2021-4">Axlehire are moving away from the "one order at a time" model</a> most gig services use. They're packing gig-driver cars to the brim and creating delivery routesa skill UPS excels at. (<a href="https://www.businessinsider.com/amazon-flex-delivery-drivers-settlement-withholding-tips-ftc-charges-2021-2">Amazon's controversial Flex service </a>runs on a similar principle.)</p><p>Tom did not specify what model UPS is testing, only that it could run on a "network outside of our network." But she did say that pilots are underway. A UPS spokesperson told Insider the company does not comment in detail on ongoing pilots. (UPS did invest in gig delivery startup Roadie's Series A funding round in 2015.)</p><p>"Once we get some more experience under our belt and a stronger point of view, we'll come back and talk to you about that," Tom said Wednesday. "But I think there's an opportunity there that would be very different then what we've done in the past."</p><p><a href="https://www.businessinsider.com/ups-exploring-same-day-delivery-to-compete-with-gig-economy-2021-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/how-vespa-scooters-made-italy-piaggio-group-two-wheelers-2019-7">We visited the Vespa headquarters in Italy to see how the world-famous scooters are made</a></p>
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