The express mail industry structure

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The express mail industry structure

The express mail industry has expanded exponentially in recent years. Despite domestic and international competition from 6 other competitors, three top competitors have held 85% of the market. In 1996 alone, individuals and organizations consumed $16-$17 billion dollars worth of services for expedited shipments within the United States alone. The apex of service was the ability to fulfill the promise of overnight shipping accompanied with next-morning delivery. However, for a substantially lower price, there were companies emerging that began to offer next-afternoon delivery, second-day service, third-day delivery (10%-20% less and 40%-50% less, respectively). There too were companies that offered same-day shipping and early-morning-next day delivery that, of course, exponentially cost more.

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The evolution of the express mail industry has made it so that the material delivery of the package was only a fraction of the services offered. Customers can now track the route of their package in detail, expect to receive outstanding customer service, and are supplied with guarantees of prompt and punctual services. Additionally, the volume of shipping has increased up to 20% in the past 10 years; unfortunately for the express mail industry, due to falling prices attributed to increased competition and streamlined efficiency of deliverables, industry revenues have totaled to increases of only 10%-15% per year. An emphasis of time-to-market strategies was implemented in their package delivery logistics system. This was, in part, due to the “perishable” or “time-sensitive” nature of the parcels. It was stated that express mail items usually had a high ratio of value to weight. There was a higher acceleration of business cycles and an expanding customer base; the sheer volume of demand for express mail naturally increased. This demand was guided by a set of basic buying motivations on the part of the consumer. The criterion of selecting an express mail carrier included, but was not limited to price, reliability, services offered, readily available parcel tracking information and/or route updates, and “convenience and customer service.” High-volume discounts were allowed for large companies in order to encourage service loyalty, however, it was often the case that after contracts had expired companies would switch to another carrier with similar services over the issue of price.