Business Service Centers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,300 business service centers in the US offer mailbox, parcel handling, and document processing services to individuals and business customers. The mailbox rental segment provides private mailboxes, packing, shipping, and notary services, and sells mailing and office supplies. The copy centers segment offers document printing, copying, and facsimile services, as well as word processing, and on-site computer rental.
Competition from Large Office Supply Chains
Business service centers have seen increased competition from large office supply store chains.
E-Commerce Drives Growth in Parcels and Returns
The growing popularity of online shopping has resulted in a surge in parcel growth delivery to businesses and consumers, accompanied by a surge in returns.
Industry size & Structure
The average business service center employs fewer than 10 workers and generates almost $2 million annually.
- The US business service centers industry (including copy shops) includes about 6,300 firms that operate over 10,300 facilities, employ 81,000 workers, and generate annual revenue of about $12 billion.
- The US industry is concentrated: the top 50 companies account for about 60% of revenue.
- Large companies include The UPS Store (5,100+ locations), FedEx Office and Print Services (2,200+ locations), and AlphaGraphics (250+ US locations).
- Many mailbox rental firms and copy centers/shops are franchises of large national chains.
Industry Forecast
Business Service Centers Industry Growth
Recent Developments
Aug 6, 2024 - FedEx, UPS Offer Better Rates to Smaller Firms
- FedEx and UPS are courting small- and medium-sized businesses with rates that are typically only available to large firms that ship high volumes, according to Supply Chain Dive. The competition for smaller shippers’ business comes amid industry-wide softness in package volumes. While FedEx and UPS are competing more aggressively on pricing for smaller shippers, they have kept discounting to a minimum for their large-volume customers. Industry observers suggest small- and medium-size shippers should be prepared for a reduction in discounting when volumes bounce back, and the carriers will likely re-focus on per-package revenue.
- The business service center industry is expected to experience slower but steady sales growth in the coming years. The industry’s year-over-year sales increased by 4.2% in 2022 and 3.9% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate to 2.3% in 2024, then rise nearly 3% in 2025. The industry will then see flat but steady average annual growth of about 3.5% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- The business services industry could see a downturn if economic conditions reduce small business marketing budgets and/or capital spending. In June, the US rent delinquency rate among small, independent businesses rose to 46%, marking the third consecutive month when the delinquency rate remained at its highest level in three years, according to a July report by Alignable, a social media outlet for small business owners. Trouble paying rent is a symptom of several underlying challenges small businesses face, including weaker revenue, high interest rates, and the lingering effects of cumulative inflation. About 73% of survey respondents say their revenue is below pre-COVID levels, and 55% report being harmed by higher interest rates. More than a third (35%) of small businesses surveyed said inflation was their top concern. The industries that struggled the most to pay rent in June included automotive (with 57% of those surveyed saying they couldn’t make rent), science and technology (52%), manufacturing (46%), real estate (44%), retail (44%), and beauty (40%).
- Small businesses may see some labor cost relief as wage growth shows signs of slowing, according to the National Federation of Independent Businesses’ (NFIB) July jobs report. One-third of small business owners surveyed said they increased compensation in July, down five points from the previous month. July’s compensation increase was the lowest reading since April 2021. About 18% of business owners surveyed said they plan to increase compensation in the next three months, down four percentage points from June. The percentage of small business owners who reported having open positions they cannot fill rose one point in July to 38%. NFIB Chief Economist Bill Dunkelberg said, “Fewer small business owners are planning to raise compensation in the coming months, and plans to hire remain stable. July marks the second month of net gains in employment on Main Street, and the number of firms with open positions remains exceptionally high.”
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