Online Delivers For Mail Boxes Etc - Company Business and Marketing

Industry Standard, The, Jan 15, 2001 by Stephen Buel

Internet retailing was supposed to hurt the private postal business. But unwanted gifts need to be shipped back somehow.

THE FOLKS AT MAIL BOXES ETC. WERE not looking forward to e-Christmas. Franchisees for the nation's largest network of private postal outlets worried that surging online gift-buying would choke their lucrative holiday shipping business.

But it hasn't worked out that way. Even as online buying has increased, the company's package-shipping revenues -- which account for half of total revenues -- have climbed an average of 17 percent over the past two years. Some of that growth comes from an unexpected source: unwanted presents and other returned goods. While December's share of overall shipping revenue has dropped from 30 percent in the mid-1990s to less than 19 percent today, January's has picked up, says Craig Stewart, the firm's VP for product development. Mail Boxes Etc. sees such potential in the market for shipping returns that this month it is launching a return-shipping service, Return.com, as an outsource for online and catalog retailers.

Mail Boxes Etc. is not just building out its shipping businesses; the company and its rivals are becoming business service centers, providing storefronts for companies that lack them. In that role, Mail Boxes Etc.'s 3,400 U.S. retail outlets are moving into services that aren't associated with its brand, such as accepting deposits for online banks, processing loan papers for Internet lenders and handling the sometimes-sensitive shipping and receiving between buyers and sellers in online auctions. The No. 2 and No. 3 competitors PakMail Services of America and PostNet Postal & Business Services, each of which boasts about one-tenth as many U.S. outlets as Mail Boxes Etc., are pursuing similar opportunities.

These private postal outlets have flourished in the 1980s and 1990s. But whether these firms can tap the Internet to expand further is far from clear: E-commerce has been battered and may not be able to fuel much more growth for Mail Boxes and its rivals.

Still, Mail Boxes Etc. clearly has a head start in helping online businesses establish a real-world presence. "We're the mortar solution for the click-and-mortar puzzle," says Kurt Schusterman, VP of marketing for Mail Boxes Etc., which is expected to be spun off or sold by its parent company, U.S. Office Products, an office-and furniture-products conglomerate. Schusterman adds that he is inundated with partnership requests from e-commerce firms.

The highest-profile partner for which Mail Boxes acts as a storefront is online auctioneer eBay, whose patrons are a huge source of shipping, packaging and imaging business. EBay processed 150 million sales last year, says Mail Boxes Etc. president and CEO James Amos, and every sale resulted in a package shipment.

EBay's customers are a fertile market, agrees franchisee Will Chun, who owns a Mail Boxes Etc. store in El Cerrito, Calif. "They don't necessarily know what it takes to pack and ship an item," says Chun, who has served many such customers. "You just don't throw it in the box, seal it and send it, which is what they expect to do."

The first phase of collaboration between the two companies began in October when Mail Boxes Etc. granted eBay customers a 10 percent to 15 percent discount on packaging services and materials in exchange for exclusive promotional placement on eBay's site. Phase two, which is now being rolled Out, permits eBay sellers to fill out shipping requests online, which saves them time when they bring the auctioned item to the store.

But phase three of the partnership is the most novel. This element, which still is under development, aims to involve Mail Boxes Etc. in the entire eBay life cycle. Sellers could snap digital photographs and complete their product descriptions at the nearest shipping outlet, and buyers could have their purchases held in escrow to permit inspection before receiving them.

Mail Boxes Etc.'s other initiatives take it beyond its core shipping business. It invested $1 million in EncrypTix, which is developing a system to let consumers purchase event tickets online -- with pickup at a Mail Boxes outlet. And it has a stake in PeopleFirst.com, a loan agent for online car purchases that sends customers to Mail Boxes Etc. to register their vehicle identification numbers and notarize their papers.

In the realm of banking, Mail Boxes Etc. has two relationships in which it serves as a branch depository for online financial institutions National Interbank and Juniper Bank. If such banks carve out a long-term presence in the market, Mail Boxes Etc. could play a vital role as their partner. Take Gregory Freimer, a National Interbank customer who had been frustrated at having to wait a couple of days for his deposits to make it from his home in Wayne, Pa., to the bank's processing center in Indianapolis. Now he drives three minutes to the nearby Mail Boxes Etc. franchise and trims several days off the process. "I let them know that my wife and I would be visiting more often," he says.