The Changing Packaging and Shipping Industry
This topic is one of which we receive the most inquiries. Therefore, I am presenting what we are experiencing now, our opinions, and some tips on how to survive.

As an industry, we experienced many changes over the years, and especially the last two years. There is much controversy over what has happened, since these last two years have changed our industry in major ways.

Major Changes
* UPS bought Mail Boxes Etc., and most of these stores changed their name to The UPS Store.
* UPS implemented many changes for The UPS Stores, specifically mandatory lower pricing on UPS shipments.
* DHL bought Airborne to gain a stronghold in the small parcel shipping market in the U.S. DHL is the major international carrier, but now they are becoming a major U.S. domestic carrier.
* Charmaine Fennie, president of AMPC passed away.
* AMPC, Associated Mail & Parcel Centers, had some major changes as a result of losing Charmaine. Brandon Gale took over as president, and has taken AMPC and NPC (Neighborhood Postal Centers) to a higher level, which is what Charmaine envisioned.
* The major carriers implemented new shipping guidelines that impact small parcel shipping from January to May 2004.
* FedEx acquires Kinko's to compete with major competition to provide retail counters. Like The UPS Stores, Kinko's offers discounted FedEx rates at the counter.

Are you tired from reading the above statements? Get used to it, if you want to stay in this industry!

Major Complaints
We have heard that the major complaint from merchants affected by new branding or affected by competitors with new branding is profitability. Merchants who have lower profit margins are looking for new ways to make more money. Merchants who are affected by competitors who have mandatory lower pricing are looking for ways to compete and make money to survive.

Merchants also are concerned with the influx of online shipping. All major carriers offer individuals a way to do this now online. Major carriers advertise this heavily.

In the same respect, there are many online businesses, and these companies provide customers a way to ship returns or recycle products with a provided label that is prepaid. Customers simply need to know a drop-off center, which they can find online with the carrier. Merchants take these packages with little or no profit.

Last, but not least, was the FedEx/Kinko's situation. Many merchants say that they were affected adversely with the UPS/Mail Boxes Etc./The UPS Stores deal and that they didn't want to face another ordeal.

History
Before I continue, let me give you some hope with history. If we were scared by changes personally, we would have closed our doors many years ago. My first major scare was when FedEx refused to service package consolidators. In the same manner, it was a challenge since day one of opening our stores to provide a satisfying answer to the question, "Do you markup UPS?" RPS and Airborne were small at this point, and it was difficult to get reliable service. We dealt with it. We learned that customers needed a good merchant to service their needs.

Then we had the 1997 UPS strike that closed many stores. Federal Express didn't have a ground service at that time. RPS (later purchased by Federal Express) was limiting new accounts so that they could make certain that they could service the increase in volume with their regular accounts. In addition, Airborne did not offer ground service then, either. Most of us only had the option of sending ground packages through the U.S. Postal Service. Because USPS was overwhelmed, too, many post offices were limiting how many packages one person could present at their counters. It was a tough road, but we knew that UPS would be back on track, so we dealt with it. Like the other survivors in this industry, we knew that we had to protect our investment.

Who can forget the September 11 terrorist attacks? It shocked us that many stores closed. Our shipping volume, and therefore our income, increased because customers were traveling less and shipping more. Yes, our nation was in shock for days and no one was doing anything other than watching the television news right after the attacks. It still puzzles us, however, why so many stores closed during this time. We wonder if some merchants lose faith quickly in their business or if they can't survive more than a few days with little sales.

These are just some of the major happenings over the years, such as the natural disasters that have occurred and are heavily reported. Each of our twenty years personally in this industry has brought some major changes.

Be Prepared
What one needs to realize is that it is necessary to keep options available and an open mind in order to work with change. Have you done a good business plan that will help you to weather 3 to 8 weeks of being without sales? It's a situation that you may want to consider if you can't "weather" the tough times.

Are you taking steps to "roll with the punches" and keep up with industry changes? If not, you may be in the wrong industry. If you don't like change, I advise you to seriously consider any business that you want to pursue as an entrepreneur.

Carrier Competition
Remember the "Cola Wars" between Pepsi and Coca-Cola several decades ago? It's an ongoing advertising and product war between the two major soft drink companies. Other industries have similar "wars" where major companies fight to obtain dominance in the marketplace.

My opinion is that the UPS/MBE and the FedEx/Kinko's deal is the same smart progressive move. FedEx and UPS now have a third major competitor who has made some major moves in the U.S. marketplace: DHL. DHL is strong, and is moving into the U.S. small package arena. Other carriers have got to be proactive with capturing international markets, just as DHL has done for approximately two decades, along with protecting their "territory" here in the USA.

You have got to be proactive in protecting your market, too. Learn from the pros. Your mind and entrepreneurial spirit is the only thing that limits you.

To continue, my guess is that UPS made the Mail Boxes Etc. deal to not only establish a storefront in the United States, but this was the best way to establish a storefront internationally. Ten years ago I toured western Europe, and Mail Boxes Etc. was the only way I found to ship my purchases other than mail. We, as small business merchants, need to realize the potential markets that major carriers have and that we are not at the top of their lists. We want to think that we are top priority with carriers, but let's be realistic.

However, one carrier does seem to have the independent mail and parcel center merchant in mind.

Progressive Moves
* AMPC and NPC (Neighborhood Postal Centers) took-off like a lightening bolt in 2003 and 2004, as independents start organizing as a group and gaining recognition.
* AMPC starts providing certification classes to improve this national recognition.
* NPC merchants get reimbursed a bit for drop-offs (Return Shipments paid).
* Merchants look towards other profit centers for their business. The major ones are custom packaging, large freight shipping, eBay shipping, and other profit centers that apply to their market.
* DHL gives NPC members major consideration so that NPC merchants can compete with their changing market.

Our Experience
As we stated earlier, we have been through many changes in two decades. We have been surprised that our sales have increased since our Mail Boxes Etc. customer across the street became a UPS Store. Also, we were pleasantly surprised in December 2004 that our business actually increased even though we have a Kinko's next door--we have been in this area for 10 years.

Our customers know our great customer service, our packaging knowledge and capabilities, and our ability to ship almost anything anywhere.

We don't worry too much about the drop-offs, since these pay for our AMPC/NPC dues, and it brings customers into the door. We have better and bigger things on which to concentrate other than who brings in drop-offs. However, we do realize that many merchants have a lot of drop-offs for their store footage, and this depends on their agreements with the carriers.

Survive
Make sure that you do a good business plan for your packing and shipping store, as I would suggest with any business. This applies to any business that you may want to pursue. For MPCs, look at profit centers for your area: custom work, large freight, eBay shippers, order fulfillment, etc.

Opening a new business and surviving is tough in any industry. My suggestion is that you do what you love to do so that you can weather the changes. If you operate correctly and if you like the challenge, why allow industry changes make you scared? Would you close your Japanese restaurant if a Thai restaurant opened next door? If so, you need to consider what you want to do in life.

Fran Scarborough

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