Why is Fedex breaking Kinko's?

The problem is that Fed Ex assumed they could increase profitability and sustain higher end commercial print businesses, because this is what made FedEx so profitable. They competed against companies that were capable of selling companies machines like Xerox, which is now struggling, and Ikon which was profitable not sure if they still are. This drove FedEx/Kinkos to spend less money in their small to average size business segments, hence the reason you get 17 year old kids giving you sh!t when they screwed up your copy because you wanted color and they gave you black and white. I did a case study on FedEx/Kinkos which highlighted these issues better than I could, and also mentioned that their strategy moving forward was to go back to what made Kinko’s money in the past; Small to Average sized customer market which will hopefully improve their customer service in their stores. I think this case study was based in 2007?

Because FedEx didn’t look at what made Kinko’s profitable—only at the fact that it was profitable. So then they bought it, and tried to run it their way, which gutted all the things that made it profitable. They probably cut employee pay and benefits, which saved them money in the short run, and drove away all the competent and well-trained employees.

@cwilbur

Yipp, a guy at my local store who is definitely a long-year veteran told me they cut entry level pay to $13, removed most health benefits offering a really shitty third party plan, and cut profit-sharing entirely. On top, the brass announces loudly that they don’t intent to change anything.

The reason I don’t understand it, is that rule number one in business is to protect your investment, and FedEx forked over 2.4 Billion!!!!! dollars.

Think they needed a write-off trap?

Kinkos was competent? Wow… I guess I never went in during that time. I’ve never had anything but the worst experiences with a Kinkos.

Wasn’t the FedEx buyout later than ‘98, though? It was after the UPS takeover of Malboxes Etc., right?

@TaoSan: no, I suspect that they bought it because they looked at the balance sheet, and then looked at it and applied conventional business wisdom.

Wages were higher than prevailing entry-level pay for similarly qualified people, health benefits were more expensive than they had to be and profit-sharing meant they were giving profits to employees rather than shareholders. So they brought them in line with “industry standard,” and probably made it even more profitable for a few quarters.

Then the most valuable employees saw that they could make more money and get better benefits elsewhere, and jumped ship. And that’s when they started to suck.

@andrew: In ‘98—‘99, there was a Kinko’s near me that was ultra-competent and open 24 hours. I could send them PDFs with cryptic instructions at 1 am and pick up the finished product, beautifully printed with no errors, at 8 am. Now, it’s a crapshoot over whether they’ll get it right—if they even try. I’ve had wrangles with them over their refusal to print copyrighted material because they saw a © on it and didn’t notice or care that the name after the © was my name.

@critter: Did you mean you read a study? That last bit was kind of confusing, you did it, but it said it better than you could?

@asmonet: Yeah sorry, I wrote this at work and I was trying to hurry because lunch time was over. I read a case study on FedEx during my grad studies and they explained why FedEx did such a poor job running Kinko’s. I meant to say the case study did a better job explaining it than I did, and I thought the case study was written in 2007.

@Wilbur

Yeah, makes sense. The “old” good Kinko’s was a real life example that the whole is more than the sum of it’s parts. And the Kinko’s concept only worked due to all the inherent added value. My wild guess would be that a lot of revenue was generated simply because it was nice to hang out there.

Fedex, being all about logistics, simply never caught on to the concept. Strangely sad…

@critter: Ah, thanks, I figured but still a bit curious. :)