In 2008, the German-owned DHL Express decided that it could no longer compete with FedEx and UPS in the U.S. domestic package delivery market. The company had lost more than $1 billion a year in 2006 and 2007. DHL’s strategy had been to compete largely on the basis of price. The strategy only allowed DHL to get 3 to 4 percent of the package delivery business in the United States. It had complaints about service – especially with problems of on-time delivery – which is a major strength in FedEx’s and UPS’s business models. In addition, DHL found that FedEx’s and UPS’s brand recognition proved too difficult to overcome. DHL had set up 18 hubs from which to distribute packages along with 412 stations from which to send packages. It shut down all of the hubs and all but 103 of its stations.

What barriers to entry did DHL find too difficult to overcome?