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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Elevators Ascending

August 2, 2007

The lights are on and all elevators are ascending once again to the top floors of Adobe Systems. Displaying extraordinary common sense, and in recognition that customers might really matter after all, the Adobe execs have decided that linking our customers to Kinko’s/Fedex was perhaps not a wonderful idea after all. Here’s the link to What They Think , the printing industry’s website. Congratulations to Adobe for a return to rational thinking!  Guess I better head outside now and dumpster dive for my old Pagemaker CDs.


On Which Side is the Bread Buttered?

July 29, 2007

It must have seemed like a good idea at the time. The latest releases of Adobe Acrobat and Acrobat Reader 8.1 include a button and a menu option that allows users to “Print to Fedex Kinkos.” Here’s the quote from Adobe’s website :

“As people increasingly communicate and collaborate across the Internet, Adobe Reader and Acrobat enable more trusted communication and collaboration with PDF, reliably reaching people around the world,” said John Brennan, senior vice president of the Platform Business Unit at Adobe. “By enabling FedEx Kinko’s Print Online functionality with Adobe Reader and Acrobat, people can simply and conveniently access FedEx Kinko’s printing services, which provides more options for working with PDF files — including professional printing and shipping via FedEx, right from the desktop.”

Simple enough. Adobe chooses to give preference to Kinko’s as an output provider to the exclusion of the remainder of the U.S. printing industry, which controls oh . . . probably about 96% of the commercially printed volume that does not land at Kinko’s. Here’s the question: Should the rest of us in the printing world have a problem with this?

Before Poor Richard weighs in, let me state the obvious. The rest of the printing world does have a problem with this. Adobe’s decision to give preference to Kinko’s as a print provider has unleashed an expected firestorm of protest from printing associations, franchises, and independent printers (see the NAPL/NAQP response).

It is very tempting to look at Adobe’s decision as just another random act of corporate stupidity. Let’s face it, we come up against this sort of thing every day. Joe Executive, way up in the pearly white tower, makes a “strategic” decision and all of a sudden an entire customer base is pronounced “non-essential.” Wasn’t this the character of Coca-Cola’s near fatal decision to introduce the “New Coke” as a total replacement for their established core product? But let us not succumb to temptation . . . this situation’s different.

First, Adobe has a defacto near-total dominance position in the design, prepress, printing and (conventional) publishing world. They have either developed the best software or purchased it (Macromedia). For example, until only a few of years ago, printers had a choice between Adobe’s Pagemaker or Quark Express for page layout programs. Quark, with slightly better functionality, actually had the edge on Adobe in the design market. This all changed with the introduction of Indesign and the Adobe CS. Quark simply didn’t keep up and exacerbated the problem with a series of heavy handed customer relations failures. Adobe gained market dominance. At this point, printers cannot leave Adobe Indesign because it is the page layout platform of choice for all of our customers.

Second, if we did leave, do we have a place to go? Certainly not to Microsoft Publisher. Corel is still around, but it only runs on the Windows platform and just feels kind of clunky. Many of us are also locked into heavy investments in .pdf techology. Adobe Acrobat and .pdf are in a sense the Rosetta Stone program and format that lets printers achieve any kind of uniform and predictable output from the great mish mash of stuff we receive. None of us would voluntarily choose a return to the vagaries of native file output and all of the errors, problems and cost that ensued from that process.

What does this all mean? Effectively, Adobe can do whatever they please.

At least for now, the printing world is locked into Adobe products and there are few (read no) viable alternatives. We can fuss and fume about Adobe’s decision, but we really have no place to go if we leave. Adobe has taken a calculated risk for some short-term gain and lost the respect of a very loyal customer base in the process.

Adobe may also have a bit of trouble with the consequences of their choice of preferred vendor. One comment on a printing forum suggested that the Fedex Kinko’s link would be better suited for the Known Problems section of the Help Menu. For many of us, Kinko’s has just not been much competition. In our market, they are actually an occasional source for customers who need a broader range of capabilities than our local Kinko’s provides.

Adobe has chosen a side of the toast to butter, with the not altogether unrealistic expectation that the unbuttered customers will just have to put up with it.

At least for now.

In the rapidly changing world of technology, it doesn’t take long for software to go the way of the Betamax, LP records or the land line phone. And royally ticking off a large portion of your customer base doesn’t do much for goodwill or loyalty. In fact, it tends to make agitated customers pretty receptive to the next best alternative that comes along.