Making House Calls

The intense competition among secure information destruction firms for commercial clients has some companies looking to tap the underserved residential market for additional opportunities. However, while possibly lucrative, a number of challenges make serving this sector a potentially daunting task.

Initially, it appears that tapping into the residential market for secure shredding opportunities holds limited opportunity, especially after

But, some intrepid shredding firms say they see great opportunities to not only address the secure destruction needs of the residential sector, but also to service the burgeoning home-based business environment.

REACHING OUT

In the past, most people left their homes to go to work. However, the number of small businesses operating in the United States is exploding. While a firm statistic for home-based businesses is difficult to come by, recent figures from the Small Business Administration estimate that there are roughly 4 million businesses that employed fewer than 10 people. While not all of these are home-based businesses, undoubtedly a fair number of them are. And this is where the opportunity lies for secure information destruction firms.

Individually, small businesses operating in residential environments are too small to make them worth the effort for many large and mid-size shredding firms. With costs that can run $80 per hour or more depending on the equipment in operation, it is difficult to cost justify sending a mobile shredding truck to a home to shred the contents of a few boxes.

Shredding companies typically seek to establish a dense route, maximizing the number of stops in a given area to improve their operational efficiencies, and residential neighborhoods typically don’t factor into the plan.

Shredding firms that have decided to serve the residential market often take different approaches, however. These can include offering visible drop-off locations where residents can deliver their material; operating vans that cater to the individual homeowner or small business owner; or holding "shred day" events. In these ways, companies are attempting to carve out a niche in what they say is an underserved market.

COLLECT CALLS

Two companies that have gained attention by introducing products for the secure collection and destruction of documents that are geared toward the consumer marketplace are RealTime Shredding and ShredStation.

These companies both say they see great opportunities by locating their products in places such as banks, shopping centers, grocery stores, retail environments and other public locations where homeowners may go.

Johnny Podrovitz, director of business services for RealTime Shredding, Colorado Springs, Colo., says the company’s "The Self-Service Shredder" is capable of processing more paper than a typical home shredder. Also, Podrovitz notes that many homeowners end up with a large quantity of documents that they need to have shredded at once and prefer to watch their documents be destroyed.

While banks are starting to take an interest in
RealTime’s shredder, the company is looking to begin a more ambitious marketing campaign to publicize the opportunities the kiosk shredder provides. Currently,
RealTime has approximately 50 shredding kiosks installed, with locations from Boston to California. Podrovitz notes that the shredding kiosks are at copy centers, schools, shopping malls and other places that see a lot of consumer traffic.

Podrovitz says The Self-Service Shredder can shred from 300 to 400 pages in two minutes, though Podrovitz says he has been able to shred as many as 500 pages in that time. This is a significantly greater volume of pages than most shredders designed for home use can handle.

Owen Murphy, chief marketing officer for ShredStation, a New Jersey-based company that also is seeking to take advantage of the potential opportunities associated with accessing the information destruction opportunities in the residential sector, says his company offers three different service options to households and home-based businesses: Ship to Shred Station, Shred Station Vault and Shred Station Express.

The variety of service options allows customers either to deliver material to one of ShredStation’s shipping partners (Ship to Shred Station), to visit one of the ShredStation Vaults located in various retail outlets or to contact ShredStation Express, which will go directly to the small business or residence to collect material.

While the company has begun by focusing its services on the East Coast, it is expanding its licensing arrangements to include operations in the Southwest, South and West Coast.

Also, ShredStation recently installed 30 of its vaults at UPS stores in the Austin, Texas, area. The national shredding firm Recall will service these vaults. While other large shredding firms don’t seem to have a plan to serve the residential market, Murphy says, "Recall’s relationship with ShredStation is a big step toward serving a market that a lot of the Iron Mountains, Cintases and Shred-its have struggled to understand and approach."

The company also has developed ShredStation Express, a service that sends a van to a residence or small business to collect material.

While it is unlikely that ShredStation Express will see the route density that destruction companies servicing commercial accounts do, Murphy notes that the company uses vans, which cost less to operate and have a much lower capacity than the collection vehicles or shred trucks used by companies that focus on commercial accounts.

While RealTime and ShredStation are targeting the non-commercial sector for most of their business, a number of secure destruction companies haven’t fully entered the residential market, though they do see opportunities in that area.

TENTATIVE STEPS

Bob Leventhal with Titan Mobile Shredding LLC, a Doylestown, Pa., mobile shredding firm, says the company has been using "shredding days" with local banks, chambers of commerce and other entities to publicize its company and grow its business.

Leventhal says the most effective way to use shredding days is to establish a regular schedule, whether it is monthly or quarterly. This helps to nurture the supply from the residential side. "Consistency is the key," Leventhal says.

Titan Mobile Shredding charges for the service, but Leventhal says many people who visit the shredding events are appreciative of the service.

When working with various agencies or financial institutions to establish a shred day, the partner organization typically does the advertising for the program, saving the shredding firm the promotional costs.

Some information destruction companies see opportunities to cater directly to small businesses and residences, a market many of the larger document shredding companies cannot justify addressing.

Paper Cuts, a Southern California-based document shredding firm, has taken this tack through the introduction of the "Drop N’ Shred" program, in which the company offers drop-off locations at various affiliated businesses, such as The UPS Store. Darryl Pikoos, owner of Paper Cuts, says that for a minimal fee, a resident can drop off her documents at the affiliated partner’s site for later shredding by Paper Cuts.

Because the company is looking to boost its business on the residential side, Pikoos says Paper Cuts conducts marketing that targets smaller businesses. "We do mailings to home-based businesses on a regular basis."

With the issue of identity theft becoming more dominant, many residents are more acutely aware of the need to have all of their documents shredded. Presently, Paper Cuts has around 15 Drop N’ Shred locations in Southern California.

The owner of a newly formed shredding company based in the Southwest says he sees the opportunities and the challenges associated with servicing the residential/home business sector. His firm services some residences, but he acknowledges there are challenges to profitably incorporating these clients with his commercial accounts. He says that while the total volume possible may be significant, the actual volume his company takes in from the residential sector is still far too small to make much of a difference to the bottom line.

"You have to schedule it so it makes logistical sense," he notes. "Many of these people have been holding on to the material for years, so they can wait a couple of days, so the scheduling can allow us to make the pickup."

He adds, "We can fill the slots [in our routes] with the residential business, although we won’t break the bank with the accounts."

VOLUME DOES MATTER

Servicing residences and home-based business may be a logistical challenge for secure destruction firms, but there is one factor that interests some shredding firms in the sector, and that is the high prices recyclers and brokers are currently paying for shredded paper. Therefore, companies can potentially boost their recycling profits by destroying larger volumes of material.

While traditionally residences generate far less information that needs to be securely destroyed relative to commercial environments, several shredding firms say they are often surprised by the amount of material that needs to be shredded by residents. Considered on an individual basis, a family of four generates far less confidential information to destroy than a mid-sized office does, but being able to coordinate a route that includes a substantial quantity of residential material may prove worthwhile for a shredding firm. And, with competition among shredding firms for the more lucrative corporate accounts resulting in shrinking margins for many companies, having minimal competition in the residential sector gives some companies an opportunity to exploit the niche. n