FedEx Sees Riches in Niches with Speedy TechConnect Repair Biz

Both FedEx and rival UPS have been reporting slowing and disappointing package-delivery activity lately as the global economy cools, especially in previously high-growth areas such as China and India. So FedEx is hoping to extract more revenues from its domestic operations by offering a new service boasting a three-day turnaround: PC repair.

FedEx has begun reaching out to major corporations to perform repairs on their "enterprise" small computers overnight through a new subsidiary called TechConnect, which will repair consumer electronics such as the iPad and the Nook. The company has been fixing its own technology gear for 30 years and saw a gap in the repair marketplace while its primary delivery business has been slowing.

"We found there was a high level of dissatisfaction in the marketplace," TechConnect manager Tod Taylor told USA Today. "What we offer is unparalleled turnaround time."

"First of all, we're probably one of the biggest repair shops for devices like that in the world for the very simple reason that FedEx basically invented the handheld, package-tracking device," FedEx CEO Fred Smith explained to Fortune. "Because a lot of that equipment is built into our DNA, we became very good at repairing it. And it was just a natural progression to tell a lot of our big customers that if you want us to also repair these devices, we can do it for you."

Smith added that he sees a huge upside for the tech repair brand extension:

It's a $15 billion market, and it's also a very sticky application. In other words, nobody has the assets that we do. We have the retail network. We have thousands of people that stop in millions of locations every day, so if you want to send your electronic device to us to be repaired, we've got the transportation networks to get it to a centralized repair shop. We don't have to have 500 of these less efficient repair shops. So it's a niche market, but it's an important niche — although I don't think we're going to be here in five years talking about that business overwhelming the transportation business.

The company plans to maintain and expand TechConnect as a business-to-business service initially, first extending it to small businesses and expanding from there. It'll offer TechConnect first through a Taiwan-based outfit called Getac that makes "rugged" computers aimed at military, law enforcement and utility workers. Over time, FedEx intends to offer TechConnect to consumers as well, especially those who regularly drop in at its 1,900 locations worldwide.

Costs will be higher than for a neighborhood computer shop or at a chain like Best Buy, Taylor told USA Today. "There is a cost associated with speedy delivery," he said.

For FedEx, initiating TechConnect carries an additional benefit: the ability to cross-promote its delivery services to customers who might, instead, favor a certain competitor wrapped in brown. With times tightening up again, no brand can have too many sales leads.