It’s happened again . . . same story, but a little different this time. In July 2007, Adobe, with indeterminate brilliance, decided that it would be advantageous to link the print dialogue in Acrobat directly to FedEx/Kinko’s (see Poor Richard’s post On Which Side is the Bread Buttered?). The rest of the industry screamed and threatened and Adobe backed down.
This time around, the culprit is Hewlett Packard (HP), who on January 27 introduced a new web-to-print site called MarketSplash (see HP’s press release). As a standalone site, MarketSplash really doesn’t represent much in the way of an additional threat to brick and mortar printers (like us), who are already under so much pressure that one more straw on the camel’s back will hardly matter. The site will go head-to-head with VistaPrint, the web-to-print leader and compete very well. In fact, with some creative marketing from HP, MarketSplash could blow VistaPrint out of the water.
Being of a curious nature, Poor Richard had to explore. MarketSplash, like VistaPrint, is template driven. And, like many/most of the online printing sites, business cards are free. So Poor Richard decided to order some. I found a template that I liked, featuring Albert Einstein; and created a business card for a new company I had conceived only 30 seconds before, the Incomprehensible Services Company. Poor Richard, needing a title, is now the Chief Conspirator of Incomprehensible Services.
I was actually impressed by the design template. The default font sizes were a little small, but the design tools offered enough for customization of a rudimentary layout. Joe Consumer will be able to operate this design tool without getting himself into too much trouble. I was also generally impressed by the quality of the layouts that were featured. A proof is approved online. The free cards are all double sided, with an advertisement for MarketSplash on the back. Here’s a screenshot of the proof page . . . I hope HP doesn’t mind. (If you do, let me know and I’ll zap the image.)
The quality of design can be attributed to another HP acquisition, a company called LogoWorks. Purchased by HP in 2007, LogoWorks offers inexpensive design work online. Like MarketSplash, LogoWorks targets small businesses who are looking for a low cost alternative to ad agencies and freelance designers. Custom design from LogoWorks is also included as an option on the MarketSplash site.
After reading this far, you may be asking, “So, where’s the problem?”
There are a couple:
- First, even though HP is not the first to offer a web-to-print site with low prices, they are going into competition with part of their customer base. This is admittedly a weak argument because HP’s desktop color printers were among the first technological developments to erode a segment of conventional printers’ business. (Home offices and the smallest of businesses were the first to go to self-printed business cards and letterhead).
- Like Adobe, HP picked the wrong partner. They have teamed with Staples Office Supply for overnight delivery of product. While the geographic distribution of Staples’ centers certainly makes sense, the assumption that they will have the capability of quickly producing and delivering a quality product is open to question. To HP’s credit, they are open to “co-branding and licensing of the MarketSplash platform” to other retailers. Poor Richard has no clue what this actually means.
Conventional printers may re-evaluate our purchasing decisions, especially when it comes to high end digital presses. HP has been the market leader with their Indigo line. The quality and capabilities of these machines are impressive and many printers the size of our AlphaGraphics (including us) had planned to migrate to this machine as leases for our existing digital equipment run out. HP also has a strong presence in the wide format arena. But HP does not have the market share in our industry that Adobe Systems has. Also, unlike Adobe’s software, there are good alternatives to the HP products. HP’s decision falls squarely into the category of “calculated risk,” and the potential return may well outweigh the consequences from agitating bothersome printers like us.
Can brick and mortar printshops compete? The answer unfortunately is “yes” and “no.” If it’s a question of price, the answer is a definite maybe. We won’t be giving away business cards, and we’re really not interested in selling 100 of anything for $39.95, but by the time you add freight some of the other items are not so cheap. The online printers convey the impression of low price, though, and it is sheer folly to say that the web printers have not eroded the low end of the customer base.
Repeat letterhead and envelope orders from small companies were profitable “bread and butter” business when our AlphaGraphics started. That business has virtually disappeared as correspondence has gone online and as a result of the VistaPrint – type alternatives. Freelance designers also once represented a good base of business for postcards and flyers. They began funneling these products to gang run printers a few years ago, similarly attracted by cheap pricing (See Poor Richard’s post Caveat Emptor). It is not just a little ironic that LogoWorks and MarketSplash actually represent direct competition to the freelance market segment, though the freelancers themselves may not realize it.
Especially in this economy, conventional printing companies are competing for a larger share of a rapidly shrinking pie. Many of us will not survive. Most of us are hanging on by our teeth and clawing with our fingernails. For those of us who will fight through these rapidly changing times, it will mean finding new ways of doing business, new products and services, and working harder and more closely with the customers we have left. Local companies have the advantage of proximity, of reacting quickly to customer needs, and the ability to provide expertise to those who still value it. Poor Richard thinks (hopes) that the ability to survive and eventually succeed again will still be based on that value proposition.
It will be another 6 or 7 days before Poor Richard receives the cards for his imaginary venture. They’ll be shipped by an unnamed ground transportation company. The order represented a $13.95 value, charges graciously waived by MarketSplash, and my cards will be printed on a medium matte paper. I’m anxious to see what that is, too. Be assured that another post will follow!
Got the cards about five business days later. They came Express Mail (USPS). The printing quality was good, but not exceptional. Digital color on an 80# Matte cover, with an advertisement for MarketSplash on the reverse side. The freebies presume that more profitable orders for other items will follow from satisfied customers who have received their wonderful free business cards. I’m sure that that is a valid assumption, but I wonder where the breakeven number falls.
Even with streamlined ordering, there is a real cost to print, cut, package and ship the stupid things. I’d figure between $10 and $15/set in a really efficient production operation. If one in four customers actually order another item, that’s $40-$60 in additional sales required before a margin is achieved. A low volume business model must turn high volumes to make a profit. This is a combination traditionally not compatible to a specialized and detailed business like printing.
Poor Richard confesses that this may be the business model for the times we’re in. It’s not a model that will be conducive to the kind of business that good local printers have traditionally done. I regret that and I think that one day the customer’s we’ve lost may regret it too.