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Holiday delivery isn't really "hard" to scale in the sense that it's some challenge nobody knows how to solve. It's just basic economics. If UPS had 2x the numb
by avar 9y ago
Holiday delivery isn't really "hard" to scale in the sense that it's some challenge nobody knows how to solve. It's just basic economics. If UPS had 2x the number of drivers they'd have no issues during the holidays.
Why don't the have 2x the number of drivers? Because the delivery market is hyper-competitive and stuck in a Nash Equilibrium where if any one delivery company would raise their prices, customers wouldn't favor them.
"Why should I need to pay double to deliver goods with 3 days notice on December 20th? I don't need to do that on any other time of the year!" They'll say.
Instead there's a much simpler explanation. Customers want to pay lower prices for delivery, even to the extent that the reliability of delivery around busy dates will slip. Of course delivery companies will attempt to perform some heroics to make it happen, but their margins will only allow them to go so far, and those are driven by how much customers actually care about prompt delivery.
- EduardoBautista 9y ago> Why don't the have 2x the number of drivers? Because the delivery market is hyper-competitive and stuck in a Nash Equilibrium where if any one delivery company would raise their prices, customers wouldn't favor them. No, it's because they are not necessary for practically the rest of the year.
- umanwizard 9y agoYou’re saying the same thing.
- r00fus 9y agoMy 20yo cousin works at UPS only during holiday times. They certainly scale during holidays already... just maybe not enough.
- dizzystar 9y agoUPS can't have 2x number of drivers during the holidays because they only need 1x drivers for the other 11 months. Simple economics would show that 1/2 the workforce isn't going to sit around for 11 months without pay. Customers don't care who the shipping provider is, and many companies / websites offer free shipping or a sane default, so really, who delivers what is often obscured from the end-user.
- bdcravens 9y ago> Customers want to pay lower prices for delivery, even to the extent that the reliability of delivery around busy dates will slip. Typically there's a money-back guarantee for late delivery, but those are either eliminated (for ground) or extended (for express) during the holiday season.
- jopsen 9y agoYou focus a lot on how well the free market works. Another aspect here is that reliability is a hidden cost the individual consumer can't see. My point being this is just as much about hiding the real cost and making things look cheaper than they are. Most shops will happily guarantee delivery before the weekend. And almost nobody will be held accountable for cries of children neglected by Santa :)
- Spooky23 9y agoIt’s a great example of the failure of markets when reliability and risk are part of the cost equation. The invisible hand only works when the actors understand what cost is.
- icebraining 9y agoI can't believe that. There's always a next Christmas, and you can be sure I wouldn't buy at the same shop that screwed me last year.