From time immemorial, the nation's greatest success story in private shipping has taken its cues from smaller rival FedEx
UPS: United Printing Service
UPS started off this week with an announcement of what -- I can only assume -- it considered fantastic news. The company believes it has found:
[A] real need in the marketplace ... for an online printing platform that is easy to use ... and is supported by a convenient network of physical locations ... [UPS is now offering an] online printing solution. With more than 4,400 locations, The UPS Store franchise anticipates its sheer size and accessibility will position it as a leader in the online printing arena.
Sounds great, UPS. There's just one problem -- the "marketplace" already has this service. It's called "FedEx Office," and it's bleeding red ink all over the marketplace's nice, new carpet.
While FedEx is too embarrassed to break out Office results separately, its SEC filings show FedEx's "Services" segment (in which Office resides) to be its worst performer, losing $800 million on $2 billion in revenue last fiscal year. Hardly a quarter goes by without FedEx mentioning an "asset impairment charge" it's been forced to take on the business.
Now don't get me wrong -- UPS is losing money in its analogous business, too ("Supply Chain & Freight," which houses the UPS Store). That has to sting, given that UPS prides itself on its "sheer size." Yet smaller, more focused office support operations like Staples
Quit while you're ahead
Still, UPS can take pride in one fact: FedEx Office is gushing red ink, while UPS has kept its losses to a trickle. So more's the mystery that UPS wants to double down on this bad idea, and imitate FedEx again. I mean, if FedEx couldn't turn a profit with the premier name in printing -- Kinko's -- what chance does UPS have?
Sure, in theory, there should be synergies here. Get customers to print their docs with you, and they're more likely to ship those docs on your trucks. But synergies only get you so far, UPS. My advice: Don't spend too much time and money repeating FedEx's mistakes.
Focus on what you're good at: Moving stuff from Point A to Point P(rofit).
Fool contributor Rich Smith does not own shares of any company named above. FedEx and Staples are Motley Fool Stock Advisor picks. United Parcel Service is a Motley Fool Income Investor recommendation. The Motley Fool has a disclosure policy.