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Industry Insight

Would-Be Printing Giants FedEx and UPS Slug It Out—But for What?

How concerned should we be about FedEx’s new Design &

By Patrick Henry
Published: September 24, 2009

How concerned should we be about FedEx’s new Design & Print Center “solution”? Announced this week, it’s basically a collection of do-it-yourself templates for everyday printed products that businesses use: cards, letterhead and envelopes, folders, brochures, note pads, postcards, note cards, address labels, flyers, and promotional magnets. The templates can be accessed at kiosks in FedEx Office Print & Ship Centers—there are 1,900 of them—or online. Technically speaking, the concept is nothing new, and FedEx already has a competitor poised to do the pretty much same thing on an even grander scale. That would be UPS, which is now billing itself as “the nation’s largest online printing network” for small businesses by virtue of the online printing services it now offers through its 4,400 UPS Stores. What could give the FedEx initiative a competitive boost is its attractive shipping policy. There’s no shipping charge for jobs with seven-day turnarounds—a break that could prove irresistible to small companies buying printed matter that isn’t time-sensitive. (UPS uses a distribute-and-print model whereby customers pick up their finished jobs at the UPS location of their choice. FedEx also offers a pickup option for orders placed in-store.) Quick printers and other vendors of print-for-pay services have been buffeted for years by competition from office-superstore copy centers and by various online schemes that appeared to be doing end-runs around traditional providers. (Remember the furor over the “Send to FedEx Kinko’s” button once embedded in Adobe Acrobat Reader? Or the ire that HP stirred with its “MarketSplash” program, which it launched and then abruptly pulled back from earlier this year?) The question now is how much the print-for-pay segment actually has left to surrender to FedEx and UPS as they joust over low-margin, commoditized work that’s already priced too low to keep an ordinary print shop going. In other words, if either or both of the giants are successful, will the industry even notice the pain in the midst of everything else that’s hurting it right now? And, what’s the potential exposure for dedicated online print providers like VistaPrint and PrintingForLess.com? The Motley Fool, by the way, thinks that FedEx and UPS are barking up a barren tree with these ventures. But, we’d like to know what you think about these latest incursions into the print space by companies that certainly have size on their side—but perhaps not much else.

Patrick Henry, Executive Editor for WhatTheyThink.com is also the director of Liberty or Death Communications, a consultancy specializing in research, education, promotional, and editorial support services for the printing and publishing industries.

Patrick Henry is available for speaking engagements and consulting projects. To get more information contact us here.

Please offer your feedback to Patrick. He can be reached at patrick.henry@whattheythink.com.

 

Discussion

By Mark Budd on Sep 25, 2009

The trenches that we printers have become accustomed to surviving in are both merciless and unforgiving. The newbies usually don't last very long and are quickly forgotten.

 

By Dennis Beck on Sep 27, 2009

I fully agree with the Fool. The Fedx business model for printing is not working. They have dropped the Kinkos name in favor of FedX office. This was done at considerable cost and was necessitated by the fact that their stores or just not working. UPS is just entering the same type of low profit margin jobs as Fedx. UPS is selling its b/w copies for .03 cents. The best price cost to produce the job, not considering overhead, would be about .01. When you take into account real overhead including,heat, electricity, labor,boxing,delivery etc.what is left is not much if anything. In fact at .03 cents I think they are really losing money. Their color copies on #28 laser sells for .35. Any good small print shop can beat that by .10 cents. Not to mention you can get .08 color copies on line. So their b/w are too cheap and their color is to expense. A formula for going out of business. Forget about real printing-litho-they just don't have it. We get about 10 to 20 customers a year who have been very and I mean very disappointed with Kinkos. Frankly, UPS is good for my business as I am sure we will get more customers as we did with FedX Kinkos. We have been in the printing business for almost 30 years. We have seen shops come and go. We have bought other shops and combined them with ours. We have learned that a very simple rule-as side from personal service and customer satisfaction. We stay in business because we price our jobs correctly. We price our jobs to make make money. If you don't do that you will go out of business. UPS and FedX don't do that. They just don't know how to-because they are in the shipping business.

 

By George Edwards on Sep 28, 2009

While I agree with some of Mr. Beck's comments, he misses the mark on several key points. The quick copy market at FedEx Office has always been a lost leader for FedEx: FedEx bought Kinko's primarily as a quick brick and mortar solution to UPS buying Mailboxes Etc. They needed many locations where people could frisbee (just throw a package on the counter and leave) all the way to custom packaging. There have been many discussions about was the Kinko's purchase a wise one or not, if you look at it from the shipping side of things, it was a bonanza. Commoditized work: Economies of scale now rule in the quick print market. While FedEx Office has never dominated in this segment, they are improving in this area. With large production centers across the country and true offset capability as well, they can compete effectively in the print market. Customer Base: FedEx Office is going after a distinctive segment of the printing market, what I like to call RPCs... Retail Printing Consumers. They want the comfort of a big box/traditional retail experience, and our not as concerned about the price. Just like Mr. Beck's business, FedEx Office has a core group of rabid fans that will use them no matter what. With all this being said, why then doesn't FedEx Office put all other printers out of business. Where FedEx Office has struggled is in trying to understand itself, the market, and react rapidly to change.

 

By Michael Jahn on Sep 28, 2009

Perhaps what might be overlooked by some who might ask "I don't get it, why would they?" is that little area where you can come in, sit down and use the computers and printers - people walk into the facility to use the copiers and computers in that FedEx Kinkos often want to then have the stuff they worked on either printed and shipped somewhere or (better yet) sent digitally and printed somewhere. Many many times I have adjusted collateral and walked into a Kinkos with my USB drive - I would have rather uploaded it to my account and asked it to be ready when I arrive (or delivered to the hotel or event) Unlike the senario that Dennis Beck has explained, where a local is simply frustrated and is looking for service, that does me no good when I am on the road and I adjust collateral on the plane or in my hotel room to be printed NOW. I use this one every year ! http://www.fedex.com/us/office/services/conventions/locations/Chicago.html

 

By Gene on Sep 28, 2009

There is a big difference between FedX Office and UPS stores. FedX Office locations are all company owned stores and they have centralized printing facilities in addition to the capabilities at each store. They also have outside representatives who call on corporate prospects. UPS Stores are most all franchise units left over from their purchase of Mail boxes etc. UPS has much less control over their units than FedX. UPS stores have always been mail box and shipping locations with a little copying on the side. Difficult transition for most of their franchise units. FedX Office is much more likely to succeed with their online solution than UPS and it's stores.

 

By Jack on Sep 30, 2009

Few points- * The devices are already onsite at the UPS Store locations so why not leverage them for value added service? * If the UPS initiative is successful in establishing their brand in association with print, and more specifically with submitting work direct online, they could easily setup regional facilities for higher end or larger jobs with a revenue share model with the franchisees. While the end result is debatable, the potential cannot be ignored. J

 

By Brian Regan on Sep 30, 2009

Jack, UPS partnered with Standard Register, so they have a large print foot print right off the bat.

 

By John on Oct 02, 2009

You do realize that part of the franchise agreement mandates what type equipment these stores have. Now as to being newbies, as a former owner of a MBE franchise I was doing digital color and mono printing before local franchised and mom and pop quick printers were doing it in 96. I was actually wholesaling this to the mom and pops who didn't want to buy or couldn't afford digital equipment at the time but were getting pounded by Kinko's. These "Newbies" have been around for quite some time and have been doing this type of printing for about 15 years now, the only difference now is that they have an online ordering system. I would also say that this system can be utilized for marketing as well as for many other things to generate business for the franchisee who forks over royalties that are pretty high to the corporate office. If you think this is an underdog or a non competitor I would re-evaluate that assumption. Also remember that in that aforementioned franchise agreement they had to have the equipment in store, although now it will actually be getting utilized.

 

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