As of 1997, the domestic express mail market was dominated by three major competitors – FedEx, UPS and Airborne Express – that served more than 85% of the market. The industry rivalry between these companies has been very fierce. Price and “parcel” wars between them became a regular thing. Each company matched not only the others’ prices, but also innovations. The industry had very effective substitutes as well, such as ordinary mail delivery, fax and e-mail.
FedEx held about 45% of the domestic express mail market and was the leader in the market. It was the inventor of the industry. The company’s operations had very high level of automation and cutting-edge technology. It also had an extremely strong focus on quality control and customer satisfaction. FedEx marketed itself quite aggressively and hosted a philosophy of putting people first. In early 1997, FedEx led a price increase, primarily for high-volume, low margin business