What Can Workspace Operators Learn from the Pack & Ship Industry?

Over the past two years, the U.S. pack and ship industry has become a significant provider of virtual business addresses and virtual mailbox services, driven by new technology and a dramatic growth in demand.  However, while virtual office services are offered by roughly 90% of workspace operators, acquisition of new virtual clients has lagged and virtual office revenue growth declined from 7.1% in 2011 to 4.5% in 2014.  With marketplace dynamics and the competitive landscape shifting, workspace operators need to re-evaluate their virtual office strategy if they want to accelerate virtual client growth and boost revenue and profits.

The digital revolution in the pack & ship industry

There are 11,000 retail pack and ship stores in the U.S.  For decades, they have offered mailing addresses and physical mailboxes, primarily to customers within a 3-mile radius of their store.  This geographic limitation was blown away in 2015, when our company, iPostal1, provided the technology for stores to offer a virtual mailing address with digital mailbox service, which enables customers to view and manage their mail and packages with an app or online, no matter where they live.  iPostal1 is the sister company to iWorkSpaceMail.

Now close to 500 stores in all 50 states list their address on iPostal1.com and offer digital mailbox services to their virtual customers.  iPostal1 has enrolled 35,000 new customers on behalf of stores in the network over the past two years, thanks to an ongoing investment in web-based marketing. More significantly, these customers generated revenue to the stores of $1.3 million from mailbox fees and add-on services over the past 12 months alone. Other virtual mailbox vendors have entered the market as well, validating this new industry segment and creating a healthy, competitive environment that drives innovation and value.

Insights from the pack & ship industry experience

1.  New business formation is driving demand for virtual business addresses. 

  • A staggering 540,000 new businesses are formed each month, mostly ‘non-employer’ businesses of all kinds, either full or part-time, with average annual revenue of $47,000. There were 24 million non-employer businesses in the U.S. in 2015, up from 22 million in 2010, which account for over 75% of small businesses.  7 million of these are in the professional/scientific/technical category.
  • 69% of entrepreneurs start their businesses at home and 52% of small businesses in the U.S. are home-based. However, when business owners want to project a more professional image, protect personal privacy, register their firm, or apply for a loan, a home business address no longer suffices.

2.  Digital mailbox technology drives adoption of virtual business addresses.

  • Shipping stores provide real street addresses that serve most basic business address needs.  With the addition of digital mailbox service, virtual mailbox holders are no longer tethered to their mailing address, as they can live anywhere and still have 24-hour access to view and manage their mail.  This enhances the utility and appeal of signing up for a business address in another locale, as the customer is connected and in control of his or her physical mail.  By offering a business address with the latest technology at a very affordable opening price point, shipping stores present a compelling value proposition – at least for those not looking for an office building address.
  • Store owners with iPostal1 get 80% to 90% of their virtual customers from outside their traditional trade area – customers who would never have walked through their door.  Customers often want a business address in their own state, but in a larger city; others may want an address in another state for legal or tax reasons.  Some sign up for many addresses to create a local business presence in multiple markets.  Foreign small and medium-size businesses need a company address and market presence in the U.S.

3.  Digital mailbox service is highly scalable.

  • Inserting the mail for 100 digital mailbox customers takes about 15 minutes on most days.  This is partly due to advanced and efficient iPostal1 technology, and partly because many virtual customers receive little or no mail.
  • iPostal1 provides an app that makes it simple and fast to capture an image of the outside of the letter or package and automatically insert the item into the customer’s digital mailbox, and then generates a ‘new mail’ notification to the customer.  As the customer base increases and mail volume grows, stores can use a low-cost desktop scanner with iPostal1 optical scanning software to insert letters at 1 per second.  Consequently, stores have been able to build a business with several hundred digital mailbox customers without adding staff.

Implications and opportunities for workspace operators

The average number of virtual office clients at workspace locations in 2014 was 64.  We see no reason why every workspace shouldn’t have 500 to 1,000 virtual clients, with annual net revenues of $200,000 to $400,000.  The millions of home businesses poised to make the jump to a business address are a prime target market.  How can you take advantage of this opportunity?

Leverage your address. Demand for business addresses is segmented by address type, services desired, and price.  An address in a professional office building offers a business image and environment very different from a shipping store, which is why we have been often asked by prospects if we offer office building addresses.  As a result, we are now expanding our listings on iPostal1.com to add workspace addresses, pictures of the building exterior and workspace, and a new pricing tier.

Think beyond local.  Some operators are more comfortable focusing on their local market.  But for those with more aggressive growth and revenue objectives, it is possible to source virtual clients from just about anywhere with online marketing provided by your channel partner.  You can expect a high percent of these clients to come from outside your local area.

Revisit your value proposition.  When shopping online, consumers easily compare products and pricing to find the best value proposition that meets their needs.  We all do this every day.  Marketing to virtual office prospects is no different.  Adjusting features and pricing to compete effectively in the internet marketplace, while optimizing revenue in your local market, requires a good understanding of the competitive landscape, and updating and differentiating your service mix.

Embrace new technology.  We all get comfortable with ‘what works’ until it doesn’t - but by then it’s too late.  Digital mailbox technology is gaining traction and at some point will be the new normal.  Did you know that the USPS has started a service called ‘Informed Delivery’ that delivers an image of daily mail to households via email?  Digital mailbox technology has been proven in the marketplace.  Even if you don’t see yourself as an ‘early adopter’ of new technology, thanks to the shipping stores, the early adoption phase is behind us.

Your address is one of your most valuable assets.  It’s time to start monetizing that for all it’s worth. To learn more, visit us at iWorkSpaceMail.


This is a guest Blog post, courtesy of Barry Gesserman of USZoom

Barry Gesserman is CMO of USZoom, LLC, the parent company to iPostal1 and iWorkSpaceMail.  He can be reached at 845.579.5762 or barryg@uszoom.com. USZoom corporate office is located in Montebello, NY.

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