As recently as a few years ago, brick-and-mortar retailers could still combat e-commerce services through the benefit of expedience. This margin as vanished over time and now shipping companies FedEx and UPS are helping sellers get products to consumers even faster.
Both companies will soon roll out Sunday delivery programs, set to launch in January.
The economics behind the move made this a difficult one to implement. Higher margins come from deliveries to office builders, where at one stop dozens of packages can be delivered. These are often bulk orders as well. However, Sunday deliveries are expected to go mostly to residential properties. These deliveries are both slower and smaller.
In order to turn a profit on Sundays, FedEx will utilize its Ground division. The fleet is paid based on metrics like total packages delivered, level of complaints and others. This tends to cut costs compared to the companies Express fleet workers.
UPS has a two-tiered wage structure and will leave some packages with the United States Postal Service in order to cut expenses. It will also use a drop off point system where multiple packages get dropped at a single location, and customers travel to retrieve them.