From the August 2000 issue of Entrepreneur

Today's postal franchises are making sure they beat the "snail mail" rap by providing unmatched service alongside access to the latest technologies. By changing not only the way we communicate but the way we do business, modern technology has been a springboard from which the postal industry has taken off.

"We're experiencing unprecedented expansion," says John Goodell, vice president of marketing and franchise development at PostalAnnex+. "It's a dynamic marketplace that's evolving quickly. The people who get out in front of the curve are going to make more money than they ever thought possible. Those who don't keep up, however, are going to fall by the wayside."

With the rise of the Internet and computers, the old postal alternative from 10 or 20 years ago has evolved into a full-service business that accommodates all technology needs, including not only the traditional services like copying, faxing, shipping and passport photos, but also a host of high-demand Internet and computer-related services, ranging from providing Internet access to operating a full-blown e-commerce site.

"The great thing about this business is anybody is a potential customer, because everybody has the basic needs for packaging and shipping. We have a lot of homemakers who are our customers, but we also have a big business base, and the SOHO market is [substantial]," says Goodell.

Technological advancements have led to the growth of the homebased-business market, which in turn has increased opportunities for the postal industry. Postal franchises have, in a sense, become secondary offices to entrepreneurs who don't want to have copiers, fax machines and postal meters cluttering their homes. "Five or 10 years ago, [the homebased-business market] didn't even exist," says James Amos, president and CEO of Mail Boxes Etc. "Today, not only is it the largest, fastest-growing customer segment in the world, but it's continuing to grow due to the impact of technology."

More than anything, the growth of b2b services over the past decade has set the stage for postal-franchising opportunities.

 


Zaheera Wahid is a former writer for The Orange County Register.

From Corporate Positions To Franchisees

Postal-industry franchisees come from all walks of life. Amos points out that 60 percent of MBE's franchisees have college educations and 20 percent have postgraduate degrees. Postal franchises are also popular among former corporate executives. "They're people who've worked hard, often for themselves but on behalf of someone else," says Amos. "They have a dream, crave recognition and many times want to create a family legacy."

In 1998, John and Leanne Gallagher, 34 and 35, respectively, left the corporate world to pursue their dream as Spokane, Washington, franchisees for PostNet. "We're creating an atmosphere in which our kids can see what it's like to work hard and have relationships with other people through a family business," says John. "That's why we left corporate America."

But moving from a corporate environment to owning your own business isn't always an easy adjustment. "Coming from the corporate world, you think you know a lot. Then you realize you have no idea how to file taxes and manage the paperwork of an entire business," says Leanne. "[The franchisor] has provided a lot of support for the different hats, whether it's marketing, advertising, employee development, store operations or finances."

The Gallaghers got the idea to buy a PostNet franchise as customers of a local franchisee. "I'd show up with packages that had to be gift-wrapped and delivered to my nephew's house the next day, and [this franchisee] would just swoop it all away and take care of it," says Leanne. "I looked at him and thought, 'I want to do what he does.' [I liked] the service he provided and the clientele he worked with."

The Gallaghers have been pleased with the business, and would like to open another within the next year.

Owning More Than One Store

Once franchisees have tasted success, they're often inspired to expand. Especially in a mature franchise segment like the postal industry, the trend of multiunit franchisees is quickly catching on. "Many franchisees want to have two, three or four centers and sometimes many more than that," reports Amos.

Franchise-hungry entrepreneurs: If one isn't enough for you, read "Chain Reaction" to see how to open store after store.

To assist multiunit franchisees, MBE offers a two-week training program that covers the ins and outs of owning more than one store. Bob Jones, a recent graduate of the program, open-ed his first Mail Boxes Etc. in San Diego in 1995, with his son, Burke. Jones, 67, has since opened two more MBE locations in the San Diego area, with plans for another two in the coming year.

Jones claims his ability to be behind the scenes rather than behind the counter helps all his stores run more smoothly. "We think we can run a better, more personal business," he says, "by developing policy and being around [all] the stores."

Using Technology To Increase Service

Jones takes customer service seriously. So much so that he may soon keep one of his stores open 24 hours a day to meet customer demand. "You don't hear me say how inexpensive we are. We don't sell on price, but on quality service. That's the future of this business. The guy who calls me urgently needing to get something to New York by tomorrow night after FedEx has left, he's not worried about money; he's worried about getting this product to this place. And we can do that," he says.

But the focus on service doesn't mean technology is ignored. "We're leveraging our brick-and-mortar stores with a tech platform designed to meet the growing demands of our consumers," says Amos.

Currently, MBE has formed an alliance with Hughes Satellite Systems. The company is putting satellites on top of every MBE center in the nation so there is complete connectivity. "It's unlimited in its application in terms of data warehousing and data mining," says Amos.

MBE is also partnering with companies like eBay to further refine the retail process. With the connectivity from its satellite system, MBE can serve e-retailers as a fulfillment company, securing transactions and providing a place for product pickups as well as inspections.

Meanwhile, PostalAnnex+ is going to great lengths to increase the services it offers by way of improved technology. "We're putting together the partnerships and programs right now that will allow us to help people set up their own Web stores," says Goodell.

PostNet has an e-commerce site where customers can buy supplies without ever setting foot in a store. Each store owner is given credit for those purchases based on his or her location.

The Convenience Of Express Units

Keeping up with today's fast-paced world, postal franchises are also focusing on expansion via express units. Not only do these offer convenience to customers-they offer potential franchisees a way to bypass the higher start-up costs of a full-service store.

"Express units are designed for market-places where we wouldn't normally put a full-size store," Goodell says. "We look for the owner of an existing store, and get him or her to carve out 500 to 600 square feet in their store for a PostalAnnex+." Units can be purchased for $76,000 to $110,000, about $30,000 less than the cost of opening a full-service store.

Another industry trend is globalization. PostNet has 680 stores internationally, and MBE already has more than 700 centers in 30 countries.

And what about the fear of saturation that haunts many industries? "That's not an issue," says Amos, "particularly when the technology available today enables us to move away from traditional demographic restraints in serving customers."

As Goodell says, "It's like the train is coming and you either get on it or get run over by the competition."

 

The Following Are A Few Postal Opportunities


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