WSJ article about UPS planning "pack and ship" stores.
February 17, 2000
UPS Is Planning Pack-and-Ship Stores
In Test Aimed at Luring New Customers
By RICK BROOKS
Staff Reporter of THE WALL STREET JOURNAL
ATLANTA -- United Parcel Service Inc., in a test aimed at appealing to new
kinds of customers, plans to open stores that would help people pack and ship
packages, competing with such chains as Mail Boxes Etc.
The planned UPS stores also would hold packages for customer pickup, sell
office supplies and provide copying services and rental mailboxes.
The world's largest package-delivery company expects to open its first
pack-and-ship store early next month in Alpharetta, Ga., an Atlanta suburb
about 12 miles north of UPS headquarters. A handful of additional stores
probably will be opened in other U.S. cities during the next two or three years,
company officials said. If the initial test is successful, UPS could gradually
expand the pack-and-ship stores into other areas of the country.
The launch of the pack-and-ship stores reflects a push inside UPS to increase
access to its well-established delivery network, already carrying about 13
million packages a day, while using the company's strong brand name to help
generate revenue in businesses not tied directly to package delivery. In
particular, the pack-and-ship concept is aimed at small businesses that need
basic mailroom services or find the existing network of shipping-only offices at
UPS to be inconvenient.
Putting pack-and-ship stores in densely populated areas also could enhance the
company's residential-delivery capabilities. The Alpharetta store will be large
enough to hold onto certain packages, possibly giving customers who aren't at
home when a UPS truck pulls up a new way to pick up their packages later.
"This is all just a test to see where it might play out," said Stephen Holmes, a
UPS spokesman. "We're not becoming a pack-and-ship company."
Still, the plans at UPS are sending shivers through the mailing-service industry,
made up of about 11,000 pack-and-send stores that steer shipments to UPS or
rivals such as FedEx Corp., Memphis, Tenn. "If they opened down the street,
they could essentially capture the whole market," said Gil Karpel, the owner of
a Pak Mail store in Boulder, Colo., which produces more than $100,000 a year
in revenue for UPS.
Mr. Karpel, who rented a warehouse to stow packages piling up at his store
during the 1997 strike at UPS, also complains the company is turning its back
on some of its most loyal customers. Pak Mail Centers of America Inc., a
Denver-based franchiser of mailing-service stores like Mr. Karpel's, is
encouraging owners to send letters about their concerns to James P. Kelly,
UPS's chief executive officer.
"UPS-owned stores is not the solution, but we have to respect their desire to
try this," said Craig Stewart, vice president of strategic initiatives at Mail Boxes
Etc., a unit of U.S. Office Products Co., Washington, D.C.
UPS officials said they aren't zeroing in on mailing-service stores, pointing in
particular to the tiny number of pack-and-ship stores being opened by UPS.
"Lots of this is going to be new business," Joe Pyne, senior vice president for
marketing at UPS, said in an interview. He added that the move is a response to
customers who have been pressing UPS "to deal with them directly," instead of
through mailing-service chains.
Separately, UPS said Wednesday that an independent arbitrator ordered the
company to create 2,000 full-time jobs under its 1997 contract with the
Teamsters union. UPS also was ordered to pay back wages to employees who
fill the new positions, a move the Teamsters estimated would cost UPS about
$80 million. UPS declined to say how much it expects to pay in back wages.
UPS said it plans to go along with the ruling by arbitrator George Nicolau,
ending a fight that began in 1998. In the contract, UPS pledged to hire 2,000
new full-time workers in each year of the five-year contract, but the company
later said the job-creation clause should be canceled because of layoffs and a
lingering falloff in package volume.
The two sides still are at odds over jobs that were to be created under the
second year of the contract, though UPS said in a statement that it "plans to
meet immediately" with Teamsters officials to discuss the matter. UPS already
is adding 2,000 new jobs under the contract's third-year provision.
The 2,000 full-time jobs UPS was ordered to create amount to about 0.6% of
the company's 344,000-employee work force.
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