Strengths
Pack and ship stores can be highly lucrative businesses that produce substantial contribution margins from multiple revenue centers. In many instances, these businesses operate as local business centers in addition to providing a wide range of logistics and shipping services for their customers. One of the primary strengths of this business is that their services are in need during any economic climate. People are going to continue to send packages to other individuals as well as businesses regardless of how the economy is doing. In most cases, pack and ship stores also provide customers with the ability to receive mail via private mailboxes. The fees from mailbox rentals are recurring in nature, and they substantially contribute to the ongoing economic stability of these types of companies.
An additional strength in regards to establishing a pack and ship store is there relatively low startup costs. Generally speaking, these businesses can be started for as little as $75,000 to $200,000 depending on the location. There is very little in the way of furniture, fixtures, and equipment that is needed to carry out the services offered at these locations. Additionally, virtually no inventory is required outside of packaging supplies.
Weaknesses
As it relates to weaknesses, the primary issue that is faced by pack and ship stores is that there is ongoing competition from local competitors as well as major national chains. The relatively low startup costs, while a strength in many respects, does allow most people to easily establish a competing business. As such, it is imperative that a pack and ship store integrates numerous services into their operations in order to maintain an effective differentiating factor. Although relatively immune from negative changes in the economy, a major economic recession can impact the number of packages that are sent during any given month.
Opportunities
For opportunities, there are numerous ways in which a pack and ship store can continue to expand its operations through the life of its business. Most importantly, pack and ship stores can integrate new business and personal services that produce highly predictable streams of revenue. Second, the business can operate as a registered agent for local businesses. Similar to how the recurring income is generated from mailbox rentals – operating as a registered agent for local businesses can also produce this type of revenue which further contributes to economic stability.
In addition to expanding the number of services that are offered, established pack and ship stores can easily expand the number of locations. Again, as a result of the low operating costs associated with these businesses – they are highly scalable. Generally, most entrepreneurs that operate these types of companies will typically space additional locations at least 10 miles apart.
Another potential methodology of expanding operations includes operating as a local courier service. In some cases, customers need same-day delivery of packages and parcels on a regional basis. Given that these businesses are heavily integrated into the field of logistics, substantial revenues can be produced by providing these types of specialized services which complement the overall operations of any given pack and ship store. The cost of integrating local courier services or last mile delivery services is relatively low given the infrastructure that would already be in place.
Threats
As it relates to the threats, the primary issue consists of addressing competitive matters within any given market. As mentioned above, there are a number of national level chains that have fully integrated services among thousands of locations. Again, it is important that a local chain integrate specialized services that can effectively provide a major differentiating factor. Although an economic recession could impact the revenues of a pack and ship store this risk is relatively muted given that many people order things online, numerous people operate ecommerce platforms that send packages from their homes to a customer’s location, and local small businesses always need a fixed address.