FedEx Allocating Entire Advertising Budget On FXO

Discussion in 'FedEx Discussions' started by Manager Wants Buyout, Aug 27, 2012.

  1. You would think a company that is struggling so bad that it intends on buying out employees, would not throw good money after bad. They are going to spend a fortune advertising FXO (Kinko's.) Of course, it will be a complete failure and sales declines will only increase. Worse than the waste of the money is customers will get there and will find out there's no one there to help them. Even my DM laughed at it when we talked this afternoon.
     
  2. Mr Fedex

    Mr Fedex Banned

    I remember DHL and their huge advertising campaign go at UPS and FedEx.They lost millions on that decision.
     
  3. MrFedEx

    MrFedEx Engorged Member



    Another guaranteed management fail. This is why they make the big bucks...brilliant decisions.
     
  4. Triple F

    Triple F New Member

    I saw this in an email from Brian Philips. Total waste of money. Maybe they should make some commercials with the team members stocking clorox and paper towels to set up for a long day of wiping and vacuuming.
     
  5. I Am Jacks Damaged Box

    I Am Jacks Damaged Box Well-Known Member

    Say it isn't so? The only thing dumber than this was buying Kinko's in the first place.

    Looks like someone at the Purple Palace is looking for their cut of that raise cash...simply brilliant!
     
  6. zapmail

    zapmail New Member

    I was unloading a boat load of supplies last week at Office..as I wheeled them in I observed two elderly ladies arguing over whether or not they were at Kinkos.."this is Kinkos" "no it says FedEx Office" "I know we're here this is Kinkos" "but it says FedEx Office" "the phone book has this address as Kinkos"...without haste I said "ladies, a few years ago FedEx bought Kinkos and spent a lot of money trying to call it FedEx Office..everyone still calls it Kinkos"...wow..I am 95% certain I saved one of them from heart failure they were so relieved..can I get a paper BZ!?!?!? Sorry to clog the post with this but it seems the norm around here!
     
  7. Ricochet1a

    Ricochet1a New Member

    Well... what you might not be considering, is that Office has BIG plans in the future of FedEx.

    With the downsizing of Express, Office is going to take an ever increasing role in providing over-the-counter sales of both Ground and Express product - along with providing a location where FedEx (notice I didn't say Express only), customers can pick up their packages that Express and Ground have exhausted their delivery attempts upon.

    Express is currently consolidating MANY of its stations into large "mega-stations" in an attempt to eliminate duplication of effort, simplify ramp sorts, enable consolidation of routes and minimize need for CSA staffing. The "slack" is to be taken up by Office employees.

    Put simply, an Office employee costs FedEx about half as much as an Express CSA. Having Express shift customers over to Office for package drop-off and pickup (Express locations have their CSAs processing outbound Express AND Ground packages right now), will save FedEx quite a lot, and increase margin on Ground shipments even more. Combined with the currently being tested "2 strikes and you're out" delivery attempts for signature required packages, Office will become the MAIN location for non-commercial customers of FedEx to conduct their transactions, both inbound and outbound.

    In addition, with the current testing of the "Cheetah" system for Office, Office will expand to offer same-day service within metro areas for shipments.

    Given the "big picture" of FedEx (at least the plans of FedEx), the advertising of Office makes PERFECT sense. I have no doubt that further locations will be closed in the coming year or two (roughly 30 or so were closed early this year, solely do to location unprofitability).

    From what I understand, Office will adopt a quasi- "hub and spoke" model for its locations. The "hub" locations will have full capability print services in addition to full shipment capability. The "spoke" locations will have minimal print capability, but be primary locations for customers to tender and pickup shipments. What will occur, is that "job shifting" will occur for print jobs. The "hub" locations will receive requests for more detailed or large print jobs from the "spoke" locations (via electronic means), run those jobs in a "production line" method, then run the completed jobs out to the location where the customer placed the order. The outlying locations can be maintained with minimal staffing, the central locations will be fully staffed to run continuous print jobs. Print jobs will even be shifted around locations, if one particular location is "swamped", while another has its employees not doing anything.

    Combined with the Cheetah program, Office will have a "crew" of drivers running same day deliveries (along with a capablity of running print jobs out in fast order to customers) - which is anticipated to gain market share from shops which cater solely to large print customers (leaving the small orders for FedEx to grab up - ironically, by offering "superior service").

    FedEx does realize that "service" can create profits - but it has also come to the conclusion that service within the existing structure of Express isn't profitable enough for them. So as Express contracts (and its employees are shoved incrementally under the bus), Ground and Office will expand to take up the "void" - provide some measure of service (ahem...) and do so at a greatly reduced cost than is currently being realized within Express.

    FedEx is deliberately on track to becoming the "Walmart of package shipping". The "Neiman Marcus" model wasn't as profitable (with the capital investment required) as a Walmart model could be (while maintaining the same level of capital investment). Quite simply, FedEx can make more by making it $0.25 at a time multiplied by a few million times a day, than making it $2 at a time, 250,000 times a day. This is what the Express employees are up against and most don't realize the implications thereof.
     
  8. SmithBarney

    SmithBarney Well-Known Member

    Ricochet, Interesting you got me thinking now... a FXO a few cities away(we don't have one in our area) just swapped two of our larger vehicles for their vans... I can see how this would benifit them.. heck FX might even just start taking directly to FXO on the first attempt, for HAL only. Hrmmm...
     
  9. Ricochet1a

    Ricochet1a New Member

    Well... that is what they are testing the limits of, the limits of customers being willing to accept lower and lower service offerings from Express, and to "get" their service from Office. If the "two strikes and you're out" test is successful (not too many customers complain), then Express will drop it to a single attempt for signature required packages.

    Everyone knows that FedEx is ACTIVELY advertising the capability for customers to have their shipments taken AUTOMATICALLY to an Office location of their choice - for pickup at their leisure. No one can miss the ad banners in the customer areas of Express locations, trying to get people to get their shipments taken to Office for pickup (yes, I still occasionally have to ship through an Express location for business needs).
     
  10. Most of that is accurate. However, the hub and spoke model was dismantled last year during a restructure because it failed like everything else that FXO tries. The Cheetah system is a failure and is totally unreliable. If FedEx is banking it's shipping business on that mess, you can expect more declines and more failure. FXO does have a real role in the future of the company. It's just not in it's current set up or with the current infrastructure. It is desperate for a complete overhaul. Copies are dead. The centers are clean shipping terminals, which can surely provide a tremendous value to FedEx. The proposition of running a shipping and printing store staffed with one employee per shift is ridiculous and not sustainable.
     
  11. Ricochet1a

    Ricochet1a New Member

    My source on this was within the past few months. From my understanding, they weren't "dismanteling it", they were looking to expand it. I think you may be seeing a local situation, and generalizing to the entire company.

    Then this is news to me. My source states that there are issues with the software, but a tremendous amount has been spent on establishing infrastructure (I believe there is a center in Texas, possibly Houston area - which is to administer the whole program, analogous to Express Global Operations Control). Cheetah plays big in the future plans of FedEx.

    Have been for a long time. With home laser printers and scanners, no one needs a copier anymore.

    If FedEx realizes their plans, Office will have someone at each location doing nothing but processing shipping, and retreiving packages for customers. Right now some locations may have a designated "shipping specialist", but in the coming couple of years, this individual will become analogous to an Express CSA or USPS counter clerk.

    When Express stations consolidate (within Office, you know nothing regarding this), the "face" of FedEx will become the Office location. I keep on telling Express employees, "Don't try to gauge the future of FedEx based upon your past and present experience with Express". The same holds true (even more so) for Office employees.

    What you are seeing at store level now, is akin to what Express Ops managers see within Express. They know change is on the horizon, but they don't fully comprehend the scope, and haven't been "let in" to the full intent of the transformation of Express. Even your district manager would only have some knowledge of the impending changes to FedEx - and only then what specifically applies to Office, and what he needs to know for the coming year.
     
  12. jmeti000

    jmeti000 Member

    Heres a question...I just transfered to a location thats roughly 90 miles away from the next city thats of decent size, and 180 something to any major metropolitian area. In addition to this, there is no FXO location in my town because it was closed (the nearest one is also 90 miles away). Would this mean they would open up another one? I dont see how they would be able to close this station/ramp since it would still require full time employees (and more of them to make hours of service) to make the drive to the remote locations we cater to, in addition to the volume of freight the town itself gets. Any ideas on how this scenario would work?
     
  13. Ricochet1a

    Ricochet1a New Member

    Good question...

    From what I know, the "transformation" will most readily be observed within larger metro areas. The rural areas (areas within the Express network serviced by "Feeder" stations) are going to fall into a gray area (from what I've seen).

    Service won't be dropped, but these outlying stations (I'd have to assume you are a feeder station, being 180 miles away from a ramp - you wouldn't get overnight freight before 10:30 AM if it were trucked in from the ramp) will be the exception to the rule.

    Whether Express makes the decision to open up Office locations that operate at a "loss" (not profitable when looked at from a single store perspective), is unknown to me. I'd have to think, that if the transformation of FedEx is successful (downsizing Express as much as possible), that FedEx will indeed make a decision to open up Office locations in these areas to fully shift customer service AWAY from Express CSAs, and have Office employees do all the work.

    What I see (this is speculative on my part), is feeder stations not being closed, but being transformed into "satellite" locations of a larger station, with NO CSA staffing. I know this would present many problems (how to accept DG, how to perform traces on packages, etc.), but I think the trend is towards that. There isn't anything that is unsurmountable with this speculative model (have Couriers make oncall pickups for DG shipments, have traces handled through the "main station" for satellite stations, etc), but the trend is unmistakable - contract Express as much as possible, outsource service to non-Express opcos whenever possible.

    I've said before, look to how the regional airlines are setup, to get an idea of how FedEx is to be setup in the future. The regional airlines DON'T maintain constant customer service at their gates - they only staff the gate around aircraft operations. The terminal desks are also minimally staffed.

    I've flown quite often where my first contact with a living person, is with the TSA Nazi looking to get into my underwear. I've checked in, and gone to security, without seeing a SINGLE representative of the airline that I'm flying on. ATM at the airport is the trend - I wouldn't be surprised if FedEx tries to get real close to that in outlying areas (or at least have an Office employee being paid half as much as an Express employee doing the "check in").
     
  14. My original point was that FedEx Office is failing and desperately needs to be completely overhauled. Obviously, having cheap labor and inexpensive locations is the way they are going. However, dropping ad dollars on a company in chaos makes no sense. Once this company is transitioned to what you outlined, it's a huge win. In the meantime, advertising copies in centers that have no one to do them is a horrendous decision. As they rightsize it, the model will work fine. Of course, you will have to release all the overpaid managers and high paid managers. As far as Cheetah goes, it's a mess. I hope it becomes functional because it's current function doesn't work. We can all see where it's going from a global perspective, small shipping terminals with cheap help. FedEx needs to wipe out expensive Express and Kinko's employees so they can get as many team members on food stamps as possible.
     
  15. Ricochet1a

    Ricochet1a New Member

    Before I start, I just want to make clear, I'm NOT trying to defend FedEx's moves in any way. I'm merely trying to give insight into the rationales for what FedEx is doing. The "big picture" comes into play, and looking at things solely from the perspective of trying to get a particular location profitable, misses the whole direction FedEx is going in the long term.

    When it comes to Office, one must remember that FedEx wrote off about $600 million in goodwill (Fred paid too damn much for what he ended up getting - and couldn't toss enough "glitter" at the mess to make it sparkle). So with that context...

    It actually makes perfect sense...

    Right now, FedEx wants people to learn that Office exists and that it is a place where they can not only make copies and have print jobs done, BUT they can also ship with Ground and Express, and ALSO choose to receive their shipments at Office locations too. Look at the "UPS Stores", but add in a print capability - that is what FedEx wants people to think of Office.

    If FedEx spends a few million in getting people to just come in a make a few copies or ship a package - that fits within their goal, the people will learn where the Office location is, and when they have a FedEx package come in that needs a signature, they will have knowledge of where to direct it so they can pick it up at their leisure.

    Take a look at the signage in Express locations (service counter), and you will see advertising directing people to get their shipments diverted to Office locations for pickup. You will also get Express CSAs telling customers they won't do packaging for them, but they can go to Office and get it done.

    After FedEx tossed $600 million in the garbage in the Kinko's deal, spending another few million on advertising their future face of FedEx is nothing - it is chump change.

    For the shareholders of FedEx and executive management, yes, For the wage employees of Express, no. Even for some of the salaried employees of Express, it will be a losing deal.

    I think you are using a local/metro area condition (inability to hire and retain staff), to generalize to the nationwide status of Office. There are a couple of Office locations I do occasionally go into (one has a VERY good source of info for me), and both are well staffed for the traffic they have. Staffing has been trimmed, but I haven't noticed any real problems. There has been issues of new employees not being trained, but again - a minor issue. I haven't heard of any issues relating to a nationwide issue of inability to recruit staff.

    And do you think that will be a problem for FedEx?? You did read the posts by the Memphoid looking for a scoop on her future, did you not? Tossing overpaid salaried types won't be any problem at all for FedEx Corporation. They are all scrambling now trying to make themselves look important enough, to be "passed over" by the angel that comes at night...

    Office store managers recently went from being salaried to wage employees... That should tell you something right there. Step one, convert from salaried to wage, step two, restrict hours to no more than 40, step 3, restrict hours to something much less - possibly even make store managers part-time with a greater role for "area" managers. Maybe even have the "assistant managers" do day to day management of a location, then have a single "Manager" keep an eye over multiple stores - increase the "span of control" of base level "managers" and cut out an entire level of managment... Express likes to have at least 10, preferably 15 wage employees under a single operations manager - no reason to NOT believe that the same span of control will be introduced into Office in the future.

    I have no information that this will indeed happen, but the "dots do lineup" when taken into context of how FedEx is looking to restructure.

    I have no doubt that it is. Dynamic Route Assignment (DRA) within Express is also a mess. It functions quite similiarly to how Cheetah is supposed to function in how software is supposed to take over all the thinking and just have drivers operate a vehicle and follow dots on a map.

    DRA is GOING to be the future of Express - it WILL happen. UPS already uses a similar system to DRA, Express is playing catch-up in this regard. Once the issues with the software assigning routing and prioritizing stops is worked out, Cheetah will become a major revenue component of Office. In addition, FedEx is anticipating about 10% of its total volume which constitues "intra-metro market" shipments that currently run through Express, to be shifted over to Office running same day pickup and deliveries at a price lower than Express Standard Overnight service - with a greater final margin. This is NOT speculation on my part.

    You just received an "A" on your final from the Fred Smith School of Business Management.
     
  16. 59 Dano

    59 Dano Well-Known Member

    I agree with everyone else. All advertising is always bad.
     
  17. Same Day City will be very good, again, it completely removes the company from its current model so that will surely impact team members by marginalizing any leftovers with skill. Only 1/3 of the managers have been made hourly. About 20% are Senior Managers in former hubs getting paid 80k for one store instead of 5 or 6. Hub and spoke is dead, has been for over a year but nearly everything else you said was well put and very insightful.
     
  18. packageguy

    packageguy Well-Known Member

    Who is saying fdx has no money, they are a cash cow and everybody knows that,
    TIME TO UNIONIZE,
     
  19. MrFedEx

    MrFedEx Engorged Member

    No, just stupid, wasteful, bad decision advertising.
     
  20. FedEx is overflowing with money. However, FedEx Office has been bleeding money for over a decade. 60-70MM in losses every year so all those profitable packages we hear about is all BS. Those packages pay for the losses. The direction of Office is clearly a good one but as of right now and ever since they bought the leveraged buyout, it's been a disaster, declining every year. It's not a local situation. The entire opco has failed for a decade and employees throughout the company hate it. The future of the company depends upon focused buyouts on long time overpaid managers, overpaid team members and adding cheap labor. The future is bright, just not for those already here.