FedEx is too big to worry about pesky Uber nipping at its heels in the same-day delivery business. Still FedEx CEO Frederick Smith could be downplaying Uber's potential for diversifying beyond its core people-transportation business.
If Uber’s controversial $17 billion valuation hinges on its expansion into businesses like logistics with its same-day delivery service Uber Rush, then FedEx CEO Frederick Smith isn’t buying the premise.
Smith, who says he “has” an Uber app and was introduced to Uber by his daughter, argues that Uber won’t “be a major factor in the logistics business for the simple reason that the demand for same-day service is a relatively small, discrete segment of demand” in a few major cities.
FedEx offers same-day delivery service in 22 markets.
In an interview on CNBC June 18, Smith says Uber will “certainly be in the space if somebody needs something picked up and moved on a same-day basis, but we don’t see that as a big threat, or quite frankly, a huge opportunity, either.”
There certainly are untold numbers of messenger services around the world — most of them unfamiliar by name — that could counter Smith’s reasoning, though, and FedEx obviously has a competing service.
Uber CEO Travis Kalanick expressed optimism to Bloomberg Businessweek about Uber Rush.
“That is going really well,” Kalanick said of the delivery pilot that debuted in New York City in April. “It’s super-young, only a month or two old. It’s almost like I’m talking about an infant.”
“But the growth of Uber Rush in New York is far greater than what the original Uber service was in San Francisco at the same age. There are still some things we want to do on product and operations. We want to get that playbook down.”
“We did a year of Uber in San Francisco before we went to a second city. You get those processes down, then you really get started.”
Asked if he could envision acquiring competitor Lyft, Kalanick said Uber has never acquired a company and prefers sustainable growth.
“Does that mean we will never acquire something? No. It’s just not our go-to [strategy].”
Here’s the video of the CNBC interview with Smith of FedEx:
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Photo credit: Uber is expanding into the logistics business with a same-day delivery service in New York City. Pictured is an Uber driver. Uber