Uber Technologies (NYSE:UBER) has launched a new package return service in nearly 5,000 cities across the U.S. The ride-share company plans to assist customers with their package returns as the holiday shopping season approaches. Uber is charging a flat fee of $5 for the service, with a reduced rate of $3 for Uber One members.
Uber’s new “Return a Package” feature allows users to schedule drivers to transport return packages to nearby post offices, including major carriers like FedEx (FDX) and United Parcel (UPS). The company essentially wants to relieve its customers of the hassle of returning products.
Customers can return up to five prepaid and sealed packages at a time.
Booming Package-Return Market
The surge in online shopping during the pandemic has led to an increase in return volumes. This trend can be attributed to consumers’ tendency to purchase multiple variations of a product and return the ones they do not wish to keep.
According to a retail trade association, the National Retail Federation, more than $212 billion worth of items were returned last year. This points to the potential size of the market for package return services. Thus, UBER seeks to grab a fair share of this market with the new service.
It is worth highlighting that there is increasing competition in the package return service space, with companies like DoorDash (DASH) and Walmart (WMT) offering their own return pickup options.
Is Uber a Good Stock to Buy?
Uber is benefitting from its strong brand awareness in the ridesharing and food delivery markets. Interestingly, the company reported its first-ever operating profit in the second quarter and expects its bottom line to improve going forward.
Overall, Uber stock has a Strong Buy consensus rating based on 31 Buy and one Hold ratings assigned over the last three months. At $59.47, the average UBER stock price target implies upside potential of 32.3%.
