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  • Writer's pictureJeremy Conradie.

UPS and FedEx battle over small business customers while Amazon looms

Updated: Jul 2

UPS and FedEx are battling to win a larger share of the small shipper segment as major customers in-source their deliveries, switch to new providers and grapple with market declines.

Experts told Supply Chain Dive that small- and medium-sized businesses are driving much of the volume growth in the business-to-consumer delivery space and their deliveries are typically more profitable for the carriers than large-scale customers. That makes them a prime target for delivery providers amid a soft demand environment.

With a large enterprise retailer, you get tens — if not hundreds — of thousands of packages a week, but the profit margins on that business are very small. You might get 10 enterprise packages for the profit contribution of one SMB package, all things being equal.” - Scott Lord (founder of Strategic Growth Advisory LLC and a former UPS marketing director)

Smaller shipper deliveries carry more value. The estimated market share of volume and revenue from small and medium-sized U.S. customers versus larger shippers in 2026 for SMBs will equate to only 35% of volume, but 42% of revenue.

SMBs are likely to weigh different factors when choosing a carrier compared to a large enterprise. Simplicity in integration and an emphasis on reliability over speed are typical priorities for smaller shippers in their relationships with delivery providers, industry observers say.

Cost is a critical factor for SMBs as well, said Jay Kent, managing director of SLB Performance. While larger customers also consider price, they have more resources to keep up with pricing changes and secure more favorable contracts.

It’s a bigger deal for small companies, because all of a sudden, they’re going to go, ‘Why are my costs going up? It’s not as easy for them to find that out.” - Jay Kent

Now both Fedex and UPS are undertaking initiatives to enable them to attract more of this market segment. Not an easy prospect.

Nucleus will add that as a 4PL Supply Chain as a Service provider with multiple customers in multiple industries, and also procuring the services of multiple carriers across that network; we are able to bring reliable base load to carriers whilst also allowing SMB customers to leverage the cost and service benefits of that network.

Source: Supplychaindive

Image Source: Getty Images

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