While UPS Stores also will feel the heat, DeWese says, "This is a powerful combination and could lead to much bigger things and much bigger threats to traditional commercial printers and fulfillment companies. I have been predicting for several years that someone would come along and string together the huge small printer segment, including quick printers, brand them and through their ubiquitous presence, and eat up huge chunks of the commercial printing, forms, direct mail, digital printing and fulfillment markets."
FedEx Kinko's now can compete anywhere in the country, Romano says. Kinko's has approximately 15 manufacturing sites nationwide that handle copying, printing, digital printing, forms management, inventory management and other document management services for major corporations. "With the backing of FedEx, Kinko's now can ship the products to the corporations anywhere, anytime," Romano says. This makes it hard for medium-sized businesses to compete with FedEx Kinko's on document management services.
Lee Ryden, president of Ryden Business Forms, Escondido, Calif., says Kinko's will have the most effect on distributorships' small accounts. "I'm sure that somewhere down the road, some of this stuff is going to hit us, probably with the smaller clients," he says. "The larger clients, I think, understand the value-added service we offer." Ryden temporarily lost business when a large national company he served ordered 16,000 forms from Kinko's instead. The forms subsequently were run through a laser printer and ultimately destroyed the printer's drum. "Whoever took the order didn't understand how they were being used," he says. "Because of that, the next order for those forms came to us."
Jim Anderson, president of Phoenix-based consultant Corporate Development Associates, agrees that Kinko's immediate target is small businesses. The stores will attract companies spending less than $5,000 per year on printing, he estimates, and they pose the greatest threat to printers with less than $1 million per year in revenue. Large, national accounts won't gravitate toward Kinko's unless the company invests heavily in an outside sales force or starts acquiring distributorships, Anderson says. If Kinko's does pursue these strategies, it's still too early to tell what long-term effect they'll have on independents, he says.
Thomas Leverton, FedEx Kinko's senior vice president for Products and Strategy, says the company positions itself as a complete business services and document management services provider. "From designing a document to generating it, we have total document management services," he says. "We now also have express and ground shipping, and packing services in all our stores." The company carries out the majority of the printing work in house, Leverton says, but it outsources special jobs such as ones requiring foil stamping for signs. "We're going to constantly improve our services and delivery, and increase customers," he says.
Opportunity for Innovative Firms
Romano says medium-sized printing companies can take advantage of one thing: Kinko's doesn't offer full-color printing. "Printing companies targeting large corporations should focus on selling full-color printing, promotional products and other collateral material," he says.
Paul Edwards, president of manufacturer FormStore® Incorporated, Fenton, Mo., says opportunities exist for independents. "Kinko's is working in part of a market that most distributors don't even recognize as part of the market yet," he says. Kinko's focus on digital printing could boost growth of the overall market, and independents could snag part of the business.
"If I'm a distributor, and I want print-on-demand for my client for a portion of their documents, I should be able to go to the management at Kinko's and set up a contract for them to provide those services to me," Edwards says. "It gives [the distributors] the power, frankly, that I've got here." He speculates that manufacturers also could benefit from relationships with Kinko's. If the company decides to position itself as a total print solutions provider, manufacturers and converters could provide Kinko's with unit sets, carbonless forms, plastic cards, labels, specialty papers and other products the company doesn't offer.
But distributors and manufacturers can't ignore FedEx Kinko's potential. "For those who say, 'Big deal. It's Kinko's. They always screw everything up anyway'--to me, that's just being stupid and naïve," says Mike Morgan, owner of distributorship National InterPrint Corporation, Corpus Christi, Texas. He predicts that FedEx Kinko's will succeed even if it doesn't offer top-notch service. Some end users will buy from the firm because of its name recognition and marketing clout. "McDonald's doesn't have the best burgers in the world, but they're still the world's largest franchise," Morgan says. Distributors who incorporate new technologies and offer superior service are best suited to compete with FedEx Kinko's, he says.
Preeti Vasishtha is assistant editor at Print Solutions. Email her your comments at pvasishtha@PSDA.org.
Assistant Editor Andrew Brown and Managing Editor Darin Painter contributed to this story.
