Business Idea That Wouldn’t Have Worked- Fantastic FedEx
People who often send and receive parcels must have come across the name ‘FedEx’. There might be a question that, how is Federal Express popular amongst people worldwide? Come let’s check out its success story.
In the field of freight, there was a delay in delivering important goods that always didn’t reach on time. This was because the packages were transported in airplanes that carried passengers and involvement of middlemen. Then came the Federal Express and boom! This made the shipment of freight overnight and it was the first to introduce overnight shipment.
The idea of a single agency, an integral air-land service, using its aircraft, delivery men, and posting stations was proposed by Frederick Smith, the CEO and the Chairperson of FedEx during his university days. He was studying at Yale and this idea was his paper submission for his economics class assignment. Considering this idea would be a great loss due to practical difficulties and so it was rejected by his professor. But Fred was not ready to accept that.
This 77-year-old man Frederick Smith, still being the CEO and the Chairperson of FedEx had a keen interest in flying airplanes and became an amateur pilot in his teens. After he graduated from Yale, he got an opportunity to serve as a pilot during the Vietnam War. During his service period in the Marine Corps, he learned about how to deal with blue-collared people and got a chance to lead a platoon of them and came to know that how their way of thinking differs from him as his background was completely different from theirs.
Later in 1971, with a $4 million inheritance, he started his freight agency and it was the same idea that got rejected. Initially, he started this to transport cheques between federal reserve banks with two falcon business jets and so he named it the ‘Federal Express’. Later he managed to get an investment of $91 million through venture capitalists and bought fourteen falcon business jets to transport over 25 cities in the USA with 398 employees working and moved the base station from Kansas to Memphis, Tennessee.
The company started to face losses due to air travel and an increase in gas prices. It was even bankrupt. Fred was just left with $5000 ultimately. ‘Difficult times make you take decision instantaneously’, with that money left Fred flew to Los Vegas and played ‘blackjack’. Sounds crazy right? But this crazy decision made him win $27000.Luck favoured him. With that, he managed to pay his labour and fuel for aircraft for a week. Eventually, he managed to find investors. Even though in his struggling period, he spent a major investment in marketing.
In 1977, he just flabbergasted with a profit of $8 million. Other airlines fought for market share along big passenger routes ranking in million while he focused on small cities and topped with no competition. Big companies like IBM and even the US air force used Federal Express to transport their goods.
The Airline Deregulation Act of 1978 helped a lot because as it relaxed the restriction of freight, that only 7500 pounds should be carried. In 1981, Federal Express became the largest air freight in the US not only with business jets but also with Boeings 727 & 737 and acquired courier companies in the US, Britain, Korea, Netherland, and UAE. In 1988, it was delivered across 90 countries and its overnight freight delivery revenue was double compared to its competitors and of course, the so-called United Parcel Service (UPS) was its all-time rival.
In 1994, Federal Express got its name abbreviated as ‘FedEx’. It just became the brand name for courier services. FedEx has become the third-largest air carrier in the world and it getting operated in 8 separate divisions.
- FedEx Office
- FedEx Trade Networks
- FedEx Ground,
- FedEx Express
- FedEx Freight
- FedEx Cross Border
- FedEx Custom Critical
- FedEx Logistics.
An interesting fact about FedEx is that it is called the ‘Panda Express’ as it is the only official courier to transport Pandas from China to any part of the world for the past 30 years.
48 years in business, 650 airports, 425,000 employees, and a revenue of $ 63.9 billion clearly shows the success of an idea that was declared impossible which was made possible with the untiring effort of Frederick who was not ready to give up and stands distinctive.