Lessons from FedEx’s ZapMail Service
Introduced in 1984, ZapMail was a faxing service by FedEx which guaranteed delivery of a document anywhere within two hours. Only two years later, ZapMail was scrapped because of its persistent losses and high cost. At the time of its failure, the venture had cost FedEx over $350 million dollars in two years. Deeper research and analysis into the company’s assumptions about its user, market, and industry may have prevented ZapMails downfall. Here are some of the assumptions that the company made:
Assumption #1: What our customers need is a service, not a product
FedEx understood that faxing was cheaper than other forms of delivery. What they mistakenly assumed is that people would need someone to do their faxing for them, since fax machines were expensive and difficult to come by at the time the company began. When fax machines quickly became cheaper and more accessible, the problem to solve was how to offer the product to consumers, not a service of use.
Assumption #2: Customers will only be able to access the fax network with our service.
Once customers were able to purchase their own fax machines at an affordable price, they could send their own faxes over public networks using the specifications developed by the ITU-T. There came a point at which it was unnecessary for consumers and business owners to utilize ZapMail’s private network, since sending mail from a purchased fax machine was cheaper. In addition, ZapMail never updated their systems to work over the public networks, so they could not adapt to the changes that were occurring.
Assumption #3: Our only competitors are other delivery businesses
It turned out that ZapMail’s main competition was not other delivery services like UPS and DHL, but it’s own customer base was also a competitor. Once fax machines could be easily purchased, people could send any document “in two hours or less” at a much cheaper cost. ZapMail was no longer the best solution to the problem.
In Conclusion
There are many other factors that led to ZapMail losing traction, such as an exploding space shuttle. Ultimately, while ZapMail did not succeed, FedEx is a success story in the business world. Their experience with ZapMail is a reminder that it is important to be aware of assumptions and continually evaluate them in order to make great products that are relevant to users and markets.
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