The industry that will never go out of style
The packing and shipping industry connects businesses offering products with consumers in a wide range of locations.
Written by
Visa Franchise
Published on
26 Jul 2022
Table of Contents:
This article is based on a video originally recorded on Vetted Biz Youtube Channel
The growth and development of a global, interconnected economy has ushered in the age of technology and e-commerce. The packing and shipping industry connects businesses offering products with consumers in a wide range of locations. And will continue to be an extremely important aspect of the economy. Small businesses and individuals use packing and shipping franchises across America to satisfy all their commercial needs. From shipping products to printing advertisements to notarizing documents. These franchises provide an excellent investment opportunity with promise of continued growth and stability.
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The Packaging & Shipping Store Business has a LOW risk factor in a good growth industry. Millions of consumers are avoiding mile-long lines at the post office by turning to packaging and shipping services. These one-stop shops package just about anything and ship it almost anywhere via national carriers.
Packing and shipping industry
The packing and shipping industry is experiencing a unique shift in primary services. As the need for traditional mailbox services has declined significantly, the expansion of e-commerce has called on shipping and packing outlets. Small businesses use third parties to send out their products and connect their products to a nationwide (or global) delivery network. Currently, in revenues, the size of the market is $2.1 Billion. The industry continues to grow steadily — over the past 5 years, the market size has increased at an average annual rate of 2.2%, and is expected to grow 1.4% in 2021.
The ratio of market value to net sales of a packing & shipping franchise is about 44%. The average UPS Store Franchise makes $579,101 annually in sales. Leaving its market value estimate around $254,804. In other words, the owner of a pack & ship franchise can expect the value of their invested capital to equal about 44% of their annual sales.
The number of businesses overall has decreased. As emphasis is no longer placed on traditional mailbox and printing services but instead on network breadth. Smaller businesses and franchises in the industry have lost out to larger companies with high brand recognition. And outlets across the country and worldwide, with connection to large carriers. This means that opening a franchise with a prominent brand and extensive company support is vital to success in the industry.
Operating a shipping business
Owning and operating a shipping business is an attractive opportunity. It is because of the simplicity of the business model and the commitment. These stores traditionally run on regular business hours. So a 9-5 Monday-Friday schedule is probable for most owners, with the possibility of delegating more time to other staff members. However, there are various skills and licenses that are important to successfully run a pack-and-ship business. As an owner-operator, you must be familiar with all the services your company offers. Which may include packing, mailbox maintenance, printing, and notary services. You will also be responsible for hiring and training other staff members to carry out the same functions. Some franchises provide training and other professional support through the management team.
In addition to these skills, there are licenses and documents necessary to open and operate pack-and-ship businesses.
Business and retail sales licenses will likely be required anywhere. And additional licenses may be required, depending on laws set by your state and local government. For non-citizens looking to start a business in the industry, most franchisors will require an E-2 or another valid visa as additional qualification. If you are looking for a detailed look at the licenses and permits necessary to open a pack-and-ship franchise as a foreign national or an individual looking to immigrate to the US, it is best to consult your immigration and corporate attorneys for further information.
Packing and shipping industry businesses
Packing and shipping businesses are generally strong investment opportunities. Because they have a stable revenue stream and simple business structure. Low initial investments are a good sign for a successful ROI. Upfront costs such as building construction, interior remodeling, or rent can greatly impact return. Externally, there is a promise of a growing demand for pack-and-ship services. In areas with competitive small business presence and individual consumers. But there are some threats that a potential business owner must be aware of.
First, the business relies on ample demand from its territory to keep it afloat. So an outlet’s location dictates how it will perform. Second, major corporate distributors such as Amazon and Fedex may have a strong presence in the areas of interest for the business. If a majority of businesses and consumers in the territory use these major companies to fulfill their needs, a new pack-and-ship business in the area will be obsolete.
Any investor should familiarize themselves with the leading packing and shipping investment opportunities. As brand recognition and carrier networks are such influential factors to success and profit for the industry.
Annex Brands
Annex Brands holds some of the world’s largest multi-carrier shipping franchises with upwards of 820 locations in America, Japan, Canada, & Mexico. They are a San-Diego, CA based company. Predominantly located in California and Texas along with outlets located across western US. There are also single outlets in the states of Maryland, Ohio, Tennessee, and Florida. And are part under the umbrella of AnnexBrands, which holds other pack and ship companies.
Their primary competitive advantage is their ability to ship and receive from multiple carriers.
Customers have the choice to use connections to UPS, FedEx, and USPS. They also offer faxing, notary services, passport services, printing, key duplication, and greeting cards.
The Annex Brands management team boasts a support system that is “Big Enough To Know, Small Enough to Care™”. The company is large enough to connect their franchisees with a nationwide shipping network. But small enough to give individualized care for its constituents. This means coaching through the onboarding process. Including location selection, training, financing and renovation. Additionally, the award-winning national advertising program will help expand your business and reach your entire potential customer base.
Postal Annex brand
You will likely operate a different brand under the Annex umbrella depending on the location where you open the business from. The Postal Annex brand is predominantly located around the west coast and Texas, while the Pak-Mail franchise is more prevalent on the east coast. These companies both offer the same services under the same general management team, but the brand differentiation allows for a strengthened brand awareness in the region you operate from. There are Annex Brand franchises spread across the entire US, but there are still plenty of open territories in major metropolitan and suburban areas that would allow investors to live and operate from just about anywhere.
The initial investment range for a Postal Annex Franchise is relatively low which provides opportunity for sizable profit and eventual growth. The franchise fee is $29,950, and the estimated total initial investment lies between $167,800 and $247,850. Additional financial information, FAQs, and contact information can be found at the company’s franchising page.
Mailbox, Print, and Business Center Developers
With over 600 businesses opened nationwide since 2004, the Mailbox, Print, and Business Center Developers have allowed investors to open, operate, and fully own their shipping industry ventures. The company provides various services to assist investors in the process of opening a mail and package store, including financing, lease negotiations, real estate, store build-out, and advertising.
The difference between this program and others in the field is that the Mailbox Developers’ service proposal allows for the investor to fully own their business. The opportunity is not a franchise, it is simply a flat fee paid to the developers for the services delivered. Entering into the Mailbox Developers system connects you with their entire shipping network and gives you access to extensive training and management support. The Mailbox, Print, and Business Center Developers offer three tiers of packages that investors can choose from to augment their business opening.
The Value package begins at a price of $78,900, and includes various pieces of inventory, equipment, and building fixtures that are necessary to run a proper pack-and-ship outlet. The Standard package includes all the features and products included in the value package, as well as upgraded fixtures, more inventory, and extra equipment such as printers and copiers. The price of this package is $98,900. The Premium package, at $128,900, adds extra allowance for advertising, mailbox construction, and security infrastructure, top-notch printing and copy machines, and additional sets of mailboxes. These packages are added on to the services the developers assist you with in opening your business. Full lists of each package’s features can be found on their pricing website.
The UPS Store
Arguably the brand leader in the industry, the UPS Store has been awarded the #1 Postal & Business Services Franchise for 30 Consecutive Years, #1 best franchise opportunity that can be started for less than $150,000 by the Entrepreneur Magazine. There are over 4000 UPS stores across the globe, and franchising with the company taps your outlet into this network.
The stores deliver professional printing and expert packing, direct mail advertising service, and most importantly, the most recognizable and trusted brand in the industry. The brown and gold logo at the front of the store is enough to drive customers by itself, which is such a vital resource in an industry that relies on long-lasting customer relationships.
The support given by the UPS corporate arm to its owners is one of the reasons why their franchises are so successful. UPS hosts a four-week training and business methodology program for all of its franchisees, and after the onboarding process, they provide top-notch operational support. After being approved to franchise with UPS, the management team will assist new owners with securing locations and financing to open their outlet. The company offers a worldwide owner and outlet network for seamless connection between cities and destinations, as well as 24/7 hotline technical support. Their brand recognition is bolstered by their national advertising program and constant product development system.
UPS Store Franchise
One major issue with opening a UPS franchise is the fact that the stores are already so well-established across the country. Most major urban areas already have at least one UPS store, and the company will not approve opening another store within an existing outlet’s territory. More often, new outlets are being built and opened in suburban and rural areas. Fortunately, though, there is a range of existing outlets which are put on sale by the owner. A list of available locations, both new and existing, can be found on the franchising page.
Estimated initial costs for a UPS Store franchise are listed based on location type. Urban and Suburban Traditional locations can range between an initial cost of $247,523 to $474,193, Rural area investments range between $163,139 and $274,722, while store-in-store formats come in at around $120,929 to $250,540. It is important to note that most of the differences in price have to do with building or obtaining a lease for stores, as well as interior fixture construction. Average adjusted gross revenue for a store is $495,000 annually, and financial performance relies on regional sales (urban vs. rural) as well as customer retention.
Here is a sample profit & loss statement for a UPS franchise in at least its third year of operation. On average, profit margin of a UPS store is an estimated 21.6% of gross sales. This number is purely an estimate, and there is no guarantee your store will make this much
UPS – Sample P&L
| Range | $ | % |
|---|---|---|
Total Revenue |
$ 579,101 |
100% |
Cost of Goods Sold |
$ 57,910 |
10% |
Gross Profit |
$ 521,190 |
90% |
Expenses |
||
Rent |
$ 45,000 |
9% |
Utilities |
$ 10,800 |
2% |
Marketing / Advertising |
$ 15,600 |
3% |
Insurance |
$ 2,000 |
0% |
Royalties |
$ 49,224 |
8.5% |
Salaries / Wages |
$ 266,386 |
46% |
Repairs and Maintenance |
$ 5,727 |
1% |
All other expenses |
$ 1,200 |
0% |
Total Expenses |
$ 395,937 |
76% |
Owner Benefit |
$ 125,254 |
21.6% |
The Vetted Biz YouTube channel has additional cost-benefit analysis on UPS Franchise opportunities and provides excellent insight for prospective investors in a UPS franchise. More data can also be found on the Vetted Biz Website, or the UPS franchise process site.
A pack-and-ship business offers a steady revenue stream and a manageable workweek for potential operators. There are plenty of opportunities for franchising with significant support systems to help you along the way with your venture. However, when opening a business in the industry, it is very important to make a careful choice considering location and brand impact, as these factors are crucial to succeeding in the right markets. At Vetted Biz, we strive to deliver you accurate business insights and help you translate your investments into success. Read more about our service offerings here, or reach out to us to schedule your US franchise business consultation today!
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