While old-school distributors and trade printers fight to maintain hard-and-fast lines, new business models have emerged.
Internet printers offer attractive benefits to print resellers
By Andy Brown
While old-school distributors and trade printers fight to maintain hard-and-fast lines by appealing to loyalty and tradition, new business models have emerged that have no attachment to the ‘rules’ of trade distribution. These companies sell retail and wholesale at the same time. They’re simultaneously printers and outsource professionals. Their business strategies are based on customers’ current needs and expectations. In other words, they do what works—not what used to work.
No segment exemplifies this upheaval more than the internet printing community. Depending on your view, they’re the reason that buyers commoditize printing, or they’re great sources of inexpensive products. They ‘steal’ your customers, or they help you keep accounts. Many of the assumptions about internet printers held by the industry rely on whether you consider them assets or competitors.
Forget your assumptions for a moment. The facts are these: More people are expected to buy print online in the future; few traditional printers can achieve the economies of scale and pricing offered by internet printers; and the best internet printers match the product quality and customer service of their traditional counterparts.
“The convenience of the internet, the fact that it’s always on and people can use it to more easily share things, and the fact that a lot of people spend a lot of money on it because it’s a new channel means that you’re going to see more functionality and more adoption as a result. There’s a certain inevitability that more work will happen over the internet,” says Charlie Corr, vice president of corporate strategy for Mimeo. “There’s no doubt that it’s going to happen. The issue is how you find your way in that new environment.”
Corr previously worked as group director for InfoTrends, an industry research and consulting firm. He’s seen studies that show print buyers spend 10 percent of their print budget on the internet. “Over time, you could see probably 25 to 35 percent of that print spend come through an internet solution,” he says. “Part of the market, because of the complexity of what they do or what they buy, is always going to be local. For most people though, it’s not going to be either/or. It’s going to be both.”
Internet Printers Defined
A printing company with a website is not necessarily an “internet printing” company. Generally speaking, true internet printers have transparent pricing information and instant quoting capabilities on their websites. Most have some sort of calculator that allows users to plug in variables such as quantity and stock.
The majority of an internet printer’s sales are generated through a web portal. Likewise, the majority of an internet printer’s marketing efforts are directed toward branding their portal (or portals) and generating traffic to them.
A wide range of different business models exists within the scope of these criteria. For instance, some internet printers sell retail, wholesale or both. Some focus on B2B sales, consumer sales or both. Some own printing equipment and only sell what they can produce. Others act as resellers that have negotiated deep discounts with numerous manufacturers. And some are direct-selling printers whose internet printing operations act as separate divisions.
Internet printers vary by product line and target customer as well. VistaPrint, for instance, targets small businesses primarily with aggressive cross-selling and up-selling initiatives. Other sites, such as Zazzle and Cafepress, are built with an on-demand model, where consumers upload artwork that can be printed on various products in small quantities. Other internet printers sell niche products and focus on vertical markets.
At the same time, more internet printers see the value of working with distributors. Even while maintaining their retail presence, leading internet printing companies have created programs specifically designed for resellers.
A Brief History
The first internet printers were started mainly by technology entrepreneurs who saw an opportunity to capture printing business through the web. Many didn’t understand the complexity behind buying print, and they went out of business. Subsequent generations of internet printers have included more industry veterans, says Dan Steinborn, president at PrintGlobe, Austin, Texas.
Steinborn, for instance, founded a marketing communications firm that also served as a print distributorship. That company eventually adopted an online retail model and transformed into PrintGlobe. Now the company also caters to resellers.
Steinborn credits his industry background as contributing to one of the leading differentiators between internet printers—customer service. “I’d been a traditional printing guy for many years. I delivered proofs to my customers. I called on them in a suit and tie, the way business used to be done,” he says. “I came to understand that though the internet gave us opportunities, it was a mistake to assume that we don’t need to have our phone number on the site, for instance. Our goal from the beginning was to have the best technology with old-school service.”
As internet printing has evolved, so have the models employed by various companies. For some, gang printing is essential to the economics of internet printing. Many customers’ files are printed at the same time in high-volume runs that minimize the costs per piece. “In the old days, you bought your own press run,” says Steinborn. “Online, you can buy 1/8th of a press sheet. Or if you buy a business card, you’re buying 1/60th of a press sheet.” Successful internet printers drive so much volume that even if they don’t own presses, they often can negotiate better than end quantity pricing with their vendors. These steep discounts allow internet printers to publish prices with which few traditional printers and distributors can compete.
“The advantage we have over offline printers is that we’re not limited geographically. We take orders 24 hours a day, 7 days a week from all over the country and group them,” says Peter Dammann, vice president of marketing and business development at Boston-based 48HourPrint, an internet printer that operates several manufacturing facilities. “We’re taking all these orders and filling runs, and those are savings that we can pass along to customers.”
Dammann says that internet printing is in an early adoption phase, but in terms of perception more than reality. “Like Amazon 15 years ago, we’re establishing our credibility. Customers see our pricing and think it must be lower quality because they’re saving so much money. That’s not true,” he says. “Because of the efficiencies of scale, we’re able to save our customers a significant amount of money, but our quality is just as good, if not better, as it is with an offline printer. At the end of the day, the equipment behind the scenes is the same. The only difference is the delivery vehicle. Rather than walk into a print shop, you order online.”
Characteristics of a Dealer Program
Resellers have gravitated toward internet printers since they first appeared. Though many internet printers didn’t initially market to distributors, they found that their customer databases were filled with repeat orders from companies that turned out to be resellers. Now it’s common for leading internet companies to offer a separate dealer program to qualified distributors. Even VistaPrint, by far the largest internet printer, offers wholesale pricing, blind shipping and sales sheets that distributors can brand with their logos.
What constitutes a dealer program varies by company. Some, such as VistaPrint, require only a fee to join. Sites such as PrintPlace and 48HourPrint base dealer discounts on volume, and others, such as Growll, DesignPrintOutlet and Carbonless.net require verification that each participant actually is a reseller. “You’ve got to pre-qualify for a broker’s discount,” says Mita Rajaei, general manager at DesignPrintOutlet. “You’ve got to email us, and we’ll legitimize that you are in fact a broker.”
Regardless of the screening process, internet printers that offer dealer programs are better suited to some things than others. “The dealers we work with are doing smaller jobs and the kind of jobs that local printers really don’t want,” says Bryan Seastead, manager of reseller and partner programs at VistaPrint. “We’re not selling a million postcards to a print broker. If his client has a seminar coming up and says ‘I need 1,000 brochures,’ that’s when you want to use VistaPrint.”
Steinborn of PrintGlobe targets business customers, including distributors, by staffing an art department and maintaining a high level of service. “When you call us, you get a dedicated customer service rep. If a customer isn’t happy with their rep, we give them a new rep,” he says. “We interface with our resellers however they need us to.”
The assumption that internet printers don’t offer the quality, service and reliability of other printers is the result of bad apples spoiling the bunch. It’s easy to set up a website and offer low pricing on the internet, making it hard for distributors who want to buy from internet printers find a quality vendor. There are ways to distinguish internet printers, however. The number one characteristic is transparency. “Give them a call. See what their customer service is like, because that’s a big difference between what the companies are like,” says Alex Kollitz, president at MyPrintSite. “The second thing, if distributors are afraid of the company having a retail presence, is see who the company domain name is registered to and see whatever domain names they own.”
“We did what everyone credible does,” says Rajaei. “On our site, you’ll see testimonials from clients we have who have come back. When it comes to brokers, the first order will be a couple hundred dollars, and they’ll make three or four phone calls and then they’ll realize, ‘I did get my printing, and it was pretty good and on time. After a while, they develop that sense of confidence.”
The Flip Side
The greatest asset that internet printers offer resellers, especially small distributorships lacking technology resources, is instant pricing. “One of the most stressful things to do is to find pricing for what the client is asking,” says Ronnie Mesriani, president and CEO at U-Printing, which offers custom sizes through its internet portal. “Imagine a client calls you for a price on a custom project, and you don’t want to wait four days for a shop to give it to you. When you go to U-Printing, you immediately get a price on all the papers we carry up to 20 by 28 inches.”
Although pricing may be instant, the flip side of internet printing may be slower turnaround. Many internet printers turn orders as quickly as offline printers, particularly if they own manufacturing equipment. Some have slightly longer lead times, however, as they wait for the gang sheet to fill with orders. Resellers who work with internet printers should confirm that their shipping needs are in line with the printer’s capabilities. Most internet printers also are limited when it comes to custom products. They primarily work with standard sizes and keep stock and finishing options to a minimum.
Internet printers will permanently replace some traditional printing business, but distributors and printers who acknowledge the impact of e-commerce and online ordering have more to gain than lose. The print market is large enough that distributors and printers that add value and build close relationships with their customers will thrive. Those who don’t face a tough road ahead. “There’s no point in going to a commercial shop and spending three to 10 times as much to get the same product that’s available online,” says David Sarabia, director of marketing at U-Printing. “The online model is about efficiency and it’s giving small businesses a real competitive edge.”
Steinborn, a former distributor, agrees: “The legacy printing market is at a real crossroads, because it’s competing with internet printers. If you’re a local provider of print, how do you keep your customer from migrating to one of them?” he says. “The internet is going to continue to play a bigger part. Where are the children of today’s print buyers going to buy their printing? At a brick-and-mortar shop?”
Mimeo is the innovator of online, on-demand cloud printing services. Over 4,000 companies rely on Mimeo’s award winning document management tools and print on demand solutions to lower document related costs while improving employee productivity. The company was founded in 1998 and operates digital print facilities in both the U.S. and the U.K. Investors include Draper Fisher Jurvetson, DFJ Gotham, Goldman Sachs (GS) Harbourvest and Hewlett Packard (HP). For additional information on Mimeo, visit https://www.mimeo.com/uk-en or call 1.800.466.4636.