Below is an overview the common risks that are associated with pack and ship store enterprises.
Automation Threat – This is a very low risk for a pack and ship store. In fact, use of specialized automation technologies will ultimately be a positive for the pack and ship store industry given that dynamic pricing can be quickly applied for domestic and international shipments. In regards to this industry becoming obsolete as a result of automation, this is an extremely low risk. This is a highly established retail industry, and the demand for pack and ship services remains strong in any economic climate.
Local Competition – Of all of the risks faced by pack and ship stores, local competition is the highest risk. There are always a number of local competitors in any regional market. As such, it is important for a pack and ship store to properly differentiate itself from competitors by offering services across a number of carriers while also providing services specific to the needs of the local market.
National Competition – There is only one major competitor in the field of pack and ship stores. However, they only provide their own shipping services and do not extend to providing arrangement with other carriers. Although there are nationally noted, independent pack and ship stores have been able to thrive despite their growth over the past twenty years. By offering services across numerous carriers, smaller scale pack and ship stores are able to effectively compete with major international carriers.
Predictable Income – This is a low risk for pack and ship stores. They are able to work with tens to hundreds of customers on a daily basis to provide packaging, shipping, copying, and related services. Once an ongoing customer base is established, many people will continue to use the same pack and ship store. This substantially reduces risk.
Recession Risk – Compared to other retail stores, the risk of recession for pack and ship stores is low. This is primarily due to the fact that people will continue to need to ship products regardless of the overall quality of the economy. These businesses also provide numerous services that produce substantial contribution margins. This strengthens their economic viability.
Recurring Income – This is another low-risk aspect of a pack and ship store’s operations. From mailbox rentals, these companies produce substantial monthly fees. Over time, this significant reduces the overall risk associated with a pack and ship store. In fact, many of the underlying costs can be fully defrayed from mailbox rentals. This is one of the main drivers among entrepreneurs seeking to establish these types of business.
Scalability – Pack and ship store enterprises are scalable. The development of new locations outside of a specific target market radius can occur relatively quickly. Additionally, additional services such as pickup of packages and notary services can be easily integrated into these operations.
Skilled Labor – For most pack and ship stores, skilled labor is not required. Any individual can be properly trained on the proper packaging of parcels, how to operate a computer to print shipping labels, and how to use copying/printing machines. The labor costs associated with a pack and ship store a relatively low as well. Most pack and ship store businesses have the owner serve in a managerial position. This substantially reduces the ongoing risks associated with this type of enterprise. Vacancies for positions can be fulfilled relatively quickly.