Buttering the Bread on Both Sides

February 22, 2009

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.)

Marketsplash Proof Page for Incomprehensible Services Company

Marketsplash Proof Page for Incomprehensible Services Company

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!

Postscript

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.

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Obsolete?

December 20, 2008

Lately, I’ve been feeling a little like the buggy manufacturer, who, annoyed at the loud and noxious belches of the new automobiles in the street, comments, “Those things’ll never make it . . . they scare the horses!”

The folks at the Alphagraphics franchise are going to be upset, but I’m going to say it anyway, “Printing on paper is  becoming obsolete.” Two items I encountered last week have led me to this conclusion:

First, I heard an article on NPR about the Detroit Free Press (Detroit Newspapers Cut Back Home Delivery). Citing cost and profit pressures, they’re phasing out print to and going to 3 days a week for their print publication. Their emphasis will be placed on their web presence.

Then, bumbling around online, I came upon the proceedings of an event called The Inbound Marketing Summit. This event was held in September in Cambridge, MA and was all about new marketing techniques — internet, social networking, and how businesses (even small businesses) can grow by attracting people who are interested in their products to their websites.  This, I guess, is opposed to old marketing that targets just about everyone and tries to drive them all into a place of business, even when they don’t want to go there (like Poor Richard at the mall at Christmastime).

I haven’t finished going through the site, yet, but videos of all of the breakout sessions are available.  The first video I watched was both exciting and frightening.   The title of the session was “R U Ready? Leveraging New Technologies to Propel Your Business,” presented by a gentleman named Greg Verdino.  I’ve embedded the video at the bottom of this post if you’d like to watch it.

With college aged kids, the fact that I’m no longer in the mainstream is brought home to me regularly. I just didn’t really understand how far out of the channel I really am.  At one point during the presentation, Verdino identifies the audience by their generation names. “I’m an ‘Xer’,” he states, “how many GenY’s are out there? Millennials?” He didn’t ask about my generation. I’m a Baby Boomer . . . ergo out of touch.

Sure, I’ve been blogging for a while. I’ve got a Facebook site and I’m playing with LinkedIn.  I’ve even tried advertising with AdWords . . . didn’t get very far. I’m really not even scratching the surface. But, until now,  it had simply never occurred to me that these forms of communication were really going to take the place of print on paper.

For my generation, it’s still natural to pick up a book or a magazine or a newspaper. I do like to look at the mail. As a printer, I enjoy the feel of paper. I feel more comfortable reading print on paper.  While my children read books, their information comes from the Internet.  Email was a major innovation for my generation. Verdino comments that email is not considered reliable by the new generation entering the workplace. They prefer to communicate through their personal network. And printers wonder why we’re not printing letterhead and envelopes any more!

Am I worried? You betcha.  It’s difficult to reinvent a small business whose livelihood is dependent upon a pretty significant capital investment in machines that print on paper;  especially in a recession that has reduced the volume of business (and consequently human and monetary resources) dramatically. Is print dead? Not yet, but it really is changing a lot.

I am certainly hopeful that there will be a place for the local printer . . . at least over the short to medium term. A lot of the commodity stuff has already been gobbled up by the online, gang run printers (See Poor Richard’s post Caveat Emptor!). Most good local print companies really enjoy working with our customers and much of our business comes from folks who either don’t have the time or the expertise to take their chances with the online print service providers. We have become, in essence, custom shops, specializing in projects that need to be handled correctly and quickly — projects that get lost in larger operations.

Many of us have expanded our range of services.  At our AlphaGraphics, we mail, we print signs, we put together packages and kits  and we fulfill orders for certain customers.  We also take on the occasional “crazy order.” That’s the one that we really don’t know how to do until we finish it, but figure that it’ll work out in the end.  These services are keeping us afloat, but we haven’t found the “next best thing” to replace print.

And yes, there will always be printing presses of some sort. We still use trains, too, but they aren’t the preponderant form of transportation that they were in the latter half of the 1800s. You can even find a horse and buggy for hire if you look around a bit.  What I really need to figure out is how to take this horse and buggy in a new and different direction without going broke in the process. Ideas anyone?

Here’s Greg Verdino’s Video:

Vodpod videos no longer available.

more about “Learn How to Leverage New Technologie…“, posted with vodpod

Finding Shoes that Fit

August 16, 2007

Printshops are like shoes. One size does not fit all feet. Like shoes, some printshops are functional and casual. Others are trendy. Some are stylishly snooty. Some are cheap: they look good to begin with, but they’re poorly made. Others are broken down, worn out, or just out of step with current styles. With shoes and printing companies, the trick is finding the ones that are durable, comfortable, and right for the occasion.

Lets talk about durability first. Times are tough in the printing business. The market is changing rapidly. Volumes of traditional printed products (forms, envelopes, business printing) are declining. At the same time there are continuing opportunities for companies willing to embrace new technologies and expand their product offerings. There are still old line printers in most towns who are essentially dead men walking. They haven’t upgraded machinery or added new capabilities and they will not survive for long. These are the old, worn-out shoes. They may feel comfortable when you put them on, but they’ll kill your feet if you wear them and they’re going to let you down on a long hike.

How do you tell if your printer falls in this category? Visit the shop. Is it clean and well-organized? Do you see computer screens everywhere? Does the machinery look new or does some of it look like a workmen’s compensation claim about to happen? Are there pallets of old paper, automobile parts or unidentifiable hunks of metal scattered through the shop? Many of these printing companies are owned by wonderful people who have loved and taken care of their customers for ever. Like the old shoes, they have given great service; but now it’s time to retire. The durable printers are constantly getting re-soled and shined. They are always talking about something new. They’re like a good pair of men’s dress shoes, they’re classic and stylish. If you take care of them, they’ll last forever.

Now for comfort. There’s no flash to comfort. You can certainly go to the Internet and shop for the latest whiz-bang deal on 1/4″ thick AC plywood business cards with UV coating and Minwax on both sides. This may be a shock for some of you, but you have to pay for the right fit: for comfort, durability and for dependability. Your local printing company is suffering from the low prices that the gang run internet printers offer (see Caveat Emptor!). I commiserated with a competitor yesterday who spoke about the time he spent training freelance designers to prepare files for print only to have them shop price on the Internet. To say it straight, Internet printing is a crapshoot. It is cheap and poorly made. You will never receive the care, the quality, the customer service, or the reliability of a good local printer from the low-priced Internet bandits.

The old Howlin’ Wolf song says, “I’m built for comfort, I ain’t built for speed.” Here’s news . . . when you find the printshop that fits, it will offer both comfort and speed. Most mid-sized shops deal with a good many customers who create and print one or two jobs each year. For these folks, our objective is to make things as easy as possible. Generally, we try to make the best from what they give us within reasonable deadlines. But most of us also have key accounts who print with us every month or every week. If you belong to this customer category, your mainstay printing company should fit like a really comfortable pair of running shoes. If you will offer a commitment to your printer beyond just “letting them quote;” they should bend over backwards to streamline the workflow for you.

At Alphagraphics, we regularly slot production time for key accounts. We have literally configured customers’ computers to help them submit print ready .pdfs, we’ve set up proprietary websites for ordering, and we’ve purchased machinery and software to meet specific customer needs. For our key customers, proofs are turned in a matter of hours (sometimes minutes) and turnaround times are extremely short.

I’ve purchased Timberland boots for years. Until just recently, they’ve been the most durable and comfortable shoes I’ve owned. I still wear a pair of Timberland hiking boots that I purchased in Maine in 1988. Those boots were expensive, over $100 in 1988 money. Earlier this summer, I was surprised to find a pair of Timberland sandals at a discount store. I bought them for $48. They hurt my feet, they’re hot, and I can’t get them to break in. They’re cheap and poorly crafted. I think Timberland sold out.

Here’s the point. Printing is a value proposition. The printing company that fits will not be the cheapest. If your only consideration is price, allowing a good printing company to “quote” is a disservice to them and to your company. You’ll waste their time and yours. They will not be the cheapest and when you buy the cheapest, you’ll eventually get the Timberland sandals . . . ill fitting, hot and uncomfortable.

What about “right for the occasion?” One pair of shoes doesn’t always work for every occasion. This one’s a little tough, because there is the temptation to tell a customer that you can do it all. Print brokers and many conventional printing companies will accept any order and simply farm it out to another printer who has the capability to fill it. This isn’t always in their customers’ best interests.

You may wear casual shoes all the time. It may be that your local business printer can handle 90% of what you do in-house. Alternately, you might enjoy fancy parties. At these events, the casual shoes don’t work; high heels and dress shoes are required.

What do you do about specialty printing or the occasional long run? Ask your mainstay printer. The printer that you want to partner with will not hesitate to tell you when a job doesn’t fit. He will also probably have a recommendation or an alternative for you. We regularly recommend a large commercial shop in town for runs that will not run cost effectively on our presses. Likewise, we have referred another company for large format work that we could not do. Occasionally we use reputable trade printers to produce products for companies that prefer us to handle the job. We explain this to our customers before the order is accepted.

Why did I take the time to write this? Because times are tough in the printing business. Companies like AlphaGraphics badly need customers who will take the time to find and commit to a business relationship with the “printer that fits.” Companies like ours have invested a lot of time and money to make sure that we are like a good pair of shoes. We’re durable, a comfortable fit for our customers, and have the right capabilities to match the needs of our customer base.

There’s a lot be said for shoes that fit.


Caveat Emptor!

March 17, 2007

TANSTAAFL – there ain’t no such thing as a free lunch.

 

I’d always thought that John Maynard Keynes coined this acronym in support of one of his free market theories. Turns out that it was Robert Heinlein, one of the strangest science fiction writers to emerge from the 1960s.

The principle is simple. There is an intrinsic value to every product or service and there is an associated economic cost to the provision of that product or service. Whether visible in the price of that product or hidden in the prices of other products, the cost is there nonetheless, and must be recovered if the transaction is to make economic sense.

Caveat Emptor, which literally means “let the buyer beware,” is a sound admonition to the purchaser when the lunch appears to be “free.” Look for the catch. The lunch may be free, but it costs $4.50 to throw away the paper sack and the apple core.

Twice last week, I’ve been confronted by “better deals” that a customer can buy over the internet. The first was from an ad agency, a customer that in the past has consumed a fair amount of time with quotations and required a little handholding when the projects came through. We had quoted postcards. They asked us to meet the price of an internet printer. I passed.

The second incident involved a college student organization that wanted some flyers. The student in charge of the project had come into the store and received pricing for the project, a thousand color handbills. He called back the next day, saying that the price didn’t fit his budget. I gave him a couple of options and finally reduced the price he was originally quoted by a little, simply because I wanted to help him out. His response frankly surprised me.

“Have you heard of Magnificoprints.com?” he queried.

I replied that I had not.

“You can get 5000 of these on manificoprints for $150, and they’ll throw in a free candy bar, too!”

I suggested that he opt for the free Snickers bar, wished him good luck, and told him to call us back if he needed help. Then I began thinking . . . always a dangerous proposition.

The internet printers have been around for a while. Four or five years ago, before the dotcom bust, there was a rush among conventional printers to establish an “internet presence.” Coalitions were formed, venture capital was obtained, grand castles of sand were built and collapsed with the incoming tide.

Most conventional printshops remained “brick and mortar” operations, using the internet for the things that made good sense for their customers. AlphaGraphics, Inc. did an exceptionally good job with this, providing their franchisees (Poor Richard included) with a web presence that included facilities for file transfer, proofing, online ordering, etc.

But now there is a new generation of online printers. At the core, the model for these businesses is not much different than that of “gang run” trade printers that have been around forever. The objective is to achieve economies of scale by combining (ganging) several similar jobs on a large sheet, thereby increasing efficiency, and reducing cost and price. Most conventional printers have relied on this model for outsourcing items like single business cards where price is more important than quality concerns.

The new online printers have enhanced this model with digital printing technology that enables very short runs with little waste or setup cost.From a manufacturing standpoint, the goal is standardization of input, maximization of capacity and mimimization of cost. Relative to a conventional printer, volumes are high and unit costs are low. Margins are very low.

The marketing strategy is blatantly simple . . . low price.

“Why, isn’t this good for the consumer?” you ask. “Shouldn’t we all be buying our printing this way?”

Poor Richard’s answer is “Yes and No,” but (predictably) “mostly No.”

The model certainly works on cheap business cards where either the quality levels are not demanding or the risk is low. AlphaGraphics has depended on a Jacksonville, FL company for years that mass produces business cards. They can produce the blue and red cards for Joe’s Bakery in Macon along with blue and red cards for Flo’s Jewelry in Mobile and Moe’s Body Shop in Kalamazoo for less than what it costs me to set up my press and print a single set. Joe saves money and the outcome is fine, as long as you stay within their paper and ink parameters and the card is uncomplicated.

And there’s the first caveat. The model works for peanut butter and jelly; maybe for a hamburger. It doesn’t work for filet mignon. What’s the risk if a business card doesn’t turn out right? You change it and do it again. Outside of the time required, the cost is certainly manageable, even for a DIY designer who is using KidPix to create the card. But what if it’s your boss’s card? What if it’s the corporate brochure or the annual report that goes to the Board of Directors? What if the event is next week and you don’t have time to do it again?

Poor Richard did a little research this morning. I read the fine print. Here it is:

19. Workmanship Guarantee
Because of the nature of “gang run” style printing ModernColorPrinting.com shall not be held responsible for the following issues which may occur during our production process: variation in color, offset (smudges), cutting variations, marking, picking, cutting issues, size discrepancies (over/under), and etc. Customer acknowledges that they are receiving gang run style printing at a substantial price discount and expedited delivery times and thus said printing will not be held to the same standard as traditional offset lithography nor generally accepted printing standards. While every effort will be made to satisfy our customer’s needs, requests for reprints or credits based on quality issues will not be recognized.

http://www.moderncolorprinting.com/terms-conditions-i-4.html

And some more:

Indeed, VistaPrint takes great pride in its commitment to customer satisfaction. However, certain circumstances are beyond our control and are not covered by the guarantee. Please note that we cannot be responsible for:

  • Spelling, punctuation or grammatical errors made by the customer.
  • Inferior quality or low-resolution of uploaded images.
  • Design errors introduced by the customer in the document creation process.
  • Errors in user-selected options such as choice of finish, quantity or product type.
  • Damage to the products arising after delivery to the customer.

Please preview your designs carefully and correct any mistakes prior to placing your order. In an effort to keep costs down and pass substantial savings along to our customers, VistaPrint does not proof documents created by its customers prior to processing.

http://www.vistaprint.com/vp/ns/customer_care/help/answer.aspx?qid=2,3&xnav=Feature

Most of our customers at AlphaGraphics have reasonable expectations when it comes to their printing projects. I don’t think that smudges, marking, picking, size variations, etc. fall within those reasonable expectations. They don’t fall within my expectations for my customers’ projects. And the best designers that we work with regularly catch minor mistakes at proof. Quality-oriented printers regularly check their customers files for errors and we regularly find them. Over 80% of the files we are given need and receive minor corrections before they are printed. In many cases our customers do not even know that a change was made to allow their file to print correctly.

In fairness, I did find one online printer that I think I might almost be willing to consider. They’re called printingforless.com and their website offers a customer satisfaction guarantee. You’re still on your own with design, but they do provide soft proofs of each job online. You can get a hard copy proof by mail for an extra charge. Their website is helpful and customer oriented.

Guess what? After all is said and done, the prices are comparable to what you can get at your local printshop. For instance, the base price for an 8.5 x 11 trifold printed 4/4 on 80# gloss text is $456.25. That’s 4 days in production + ground shipping from Montana. To reduce the production time to 2 days and ship overnight brings the total to $717.80, right in line with your local printshop who will help you with your art, your proof and probably deliver the job to your doorstep.

One of Heinlein’s more bizarre characters was a human named Michael Valentine Smith, born and raised on Mars by Martians, and rescued back to earth as a young man. From the Martians, Smith obtained a super-human analytical capability, a way of understanding that Heinlein dubbed “grokking.” To truly understand something, in Smith’s fashion, was to “grok” it.

The dictionary definition of caveat emptor is “the axiom or principle in commerce that the buyer alone is responsible for assessing the quality of a purchase before buying.” This means that you, the buyer, must determine the intrinsic value of the deal. To do this, you must understand what you are buying, you must “grok” it.

There’s a lot more to printing than meets the eye. Internet printing has a lot less to offer than low price. TANSTAAFLthere ain’t no such thing as a free lunch. Grok it?