eShip-4U

eShip is a small Israeli start-up with a potentially exciting new concept for the residential package-delivery value chain--the Automatic Delivery Machine (ADM). Much like today's ubiquitous ATMs, ADMs would allow consumers to have parcels delivered to a nearby ADM rather than to their residences. When a package is delivered, the consumer would be contacted, given a PIN, and could retrieve the package anytime, day or night. Currently, carriers (FedEx, UPS, and the U.S. Postal Service) bear huge costs for local deliveries (the so-called last-mile cost), perhaps as much as $6 billion annually. Most of this cost would disappear if packages could be delivered to ADMs rather than to residences. At the core of eShip's concept is a sophisticated information system that links all the ADMs over the Internet. This case focuses on eShip's attempt to formulate a business model to facilitate entering the U.S. market. The dilemma centers on the role that eShip should play in the value chain and with whom it should partner. Although the ADM concept potentially creates huge value, capturing some of that value is a daunting challenge, particularly in the face of the size and power of U.S. carriers.