Further online print growth at the expense of smaller providers – new strategies are called for.
I am not a fan of end-of-year reviews, which have recently started to be “broadcast” on TV as early as October. For that reason I am simply going to treat myself and the readers of beyond-print.de to a forecast for 2017. And that, dear readers, is not a simple task – looking into my crystal ball to see what might happen in 2017 has become somewhat complex …
What’s going to happen in the online print market?
In 2015 and 2016 the major players consolidated their market positions through acquisitions and “fresh capital”. It has become particularly fashionable to acquire highly profitable businesses and thereby improve total revenues. That is not a wrong approach – and helps well-capitalized online print providers in particular to grow faster and to put blue water between them and any potential pursuers. But each acquisition brings with it an obligation to act quickly, to ensure it does not turn into a pyrrhic victory. Strategies have to be modified and new ideas actioned. If a buyer is too slow in doing the needful, it gets tough trying to continue the success story of the business recently taken over. Often more money needs to be injected, as the process of integration into the acquiring company is underestimated.
However one can generally assume that the major online print providers will continue to grow in 2017. Ambitious targets of 14-18% growth are definitely realistic, given the market situation and greater receptiveness to online print on the part of customers, so long as the providers are able to reach out to and connect with customers …
And it’s precisely this process of “reaching out to and connecting with customers” that is becoming more complex, of course. It’s not enough for the major providers just to unveil new products, venture the one or other experiment or to convey the impression of being innovative. It’s time for the providers to professionalize their businesses – mobile channels are becoming more and more important; customers don’t just want “cheap” print, they want to be taken on a customer journey through the online print store in a way that meets their needs. And that is unfortunately what most online print providers are not yet capable of. Apart from the global market leader and the German market leader, no-one has yet really internalized this requirement.
At any rate what is keeping us in suspense now is what moves eCommerce giant, Amazon, is going to make in the market in future. My team has told me about mass customization, photobook, business card and office print product trials in various countries and showed me examples, which are really exciting and are likely to pile more pressure on market leader, Cimpress. Cimpress has put in a lot of effort into positioning itself in the mass customization segment, and slowly but surely it now has to “deliver”. I am more than confident that Keane and his team will get it right – they can’t afford to make any mistakes. The latest acquisition, NPC, which you shouldn’t underestimate as just being a mere “ballpoint pen printer”, looks promising – but brings us back to the good old topic of “integration”.
In my view it is only a matter of time before Amazon plays a more major role in the print market. I believe that the folks at Amazon have long since grasped that you can earn good money from “print” as a communication medium by providing offerings geared to specific target groups and having a smart eCommerce infrastructure. And I mean not just printed mugs but commodity printing in particular, i.e. anything that you can standardize. Here there are as yet undreamt-of sources of growth, which so long as these standardized products are convenient for customers to use, will very soon be offered by “non-print providers” like Amazon. But the ones, who will suffer as a result, are not so much the major online print providers (well, so long as they don’t make any mistakes), but rather those offline print providers just around the corner.
What’s going to happen to offline print in 2017?
Things are likely to remain tough for our offline print colleagues. Very tough. Apart from the absolute necessity of digital transformation that I am keen on mentioning, those print providers that are “willing to transform” are often not making the transition to becoming online providers quickly enough. Yes, and before you start saying, “I don’t want to become an online print provider”, here is just a brief definition of what an online provider is. In my view every print provider that actions their I/O processes via an online platform or online store or as an online-connected print business is an online provider. Well now, you might say, that’s stretching it a bit, but compared to those that do nothing, it is at least a start. I love print and am really amazed that scores of print business owners have still not yet tackled the topic of digital transformation and will sooner or later fall by the wayside. And to be honest, the arrogance of some print providers, who then enumerate how much they make in sales and who say that their customers “don’t require online print at all”, gets on my nerves. I then like advising people to think back 15 years, before Amazon came on the scene, and then recall what many downtown districts look like today. 15 years ago it was the retailers that completely underestimated the impact of eCommerce …
So it’s hardly likely to come as a surprise that I can clearly see more print companies going out of business. This process is likely to be brutal, especially in D/A/CH. There are quite a few print brokers operating in our market by offering extremely low prices. These prices are usually achieved to the disadvantage of the suppliers actually producing the print products – and it is only a question of time before some of them go under. Overall bankruptcy figures for 2016 already include some victims of this ruthless game. But, and this may reassure a few folk out there, this game is finite, because at some stage no-one wants to play the game anymore.
And yet – print business owners, who still regard eCommerce and B2B platforms as mere toys, are in for a tough, brutal time until 2020. Print providers must emphatically put all their efforts and resources into digitalization and into developing new strategies.
What will happen to print providers that are already on the right track in 2017?
In the consultancy business we call those print providers that are already on the road to digitalization “transformers” – and that’s likely to hit the nail right on the head. Businesses that are already on the road to transformation should maintain their course and not forget that business models never just fall into your lap, and least of all business success. The long road to becoming a B2B online print provider or a serious player in the online market is always based on a combination of discipline, will and the requisite mindset – and, OK, a little bit of capital wouldn’t go amiss. One issue associated with digitalization is definitely print automation. If you have ever seen what a high-octane performance a company can put in if it has state-of-the-art printing presses at its disposal, you will understand that you can also offer print products at inexpensive prices. Companies that cannot compete in the automation race must either urgently find a suitable partner or develop their own strategy.
These will be interesting times for the scores of “smaller” online print providers. While the major providers have impressive product portfolios and massive marketing budgets that enable them to stand out in the marketplace, many smaller providers utilize their regional strengths and position themselves as providers serving a town/city or region. Other providers successfully turn their hand to serving niche markets or functioning as service partners. Only those businesses that understand the need to combine their offering with a responsive eCommerce service or a flexible B2B platform and really grasp what eBusiness is all about will continue to grow in 2017. In particular, if they can position themselves as specialists, they have a great chance of holding their own against the major providers. But be careful – successful businesses don’t have just one sales idea, they make use of all sales and distribution options. Just because you happen to have an online store doesn’t mean you should abandon other efforts to appeal to customers; instead you should upgrade your portal or store into a full service platform. Growth rates for SMEs will not be as great as for the really major online print providers, but 5-10% is feasible, if you apply eCommerce et al smartly.
And what will happen to customers?
Well now – we are observing more and more that even ultra-loyal customers of analog print companies are already grasping the fact that it pays dividends to partner with print providers that have understood the issue of digital transformation. The benefits are obvious – convenient data delivery, rapid coordination, fast delivery … and so many of the “my customer doesn’t want that” type of print company will be left out in the cold, and only because they have no notion about how to tackle the eBusiness issue. And where did Zipper get that idea from? It’s quite simple: we take a close look at print tenders, and – surprise, surprise – the winners (if we’re talking the award of long-term tenders by customers) are always those companies that already operate B2B platforms. Ultimately customers will be even lazier in 2017 and customer behavior will continue to diversify. Even cult brands like Flyeralarm should be careful here – many customers think one-stop shopping is really cool – but so are user guidance, mobile solutions and new offerings too.
And there’s another issue that’s speeding up the change in customer behavior. The research division of KfW (KfW Research) published an interesting study (only available in German) back in 2015. According to that study, as many as 580,000 mid-sized enterprises will be looking to appoint successors to incumbent business owners and CEOs in 2017 – and that’s just the start. What does that mean for customers and buying behavior? Exactly as in other aspects of life, younger decision-makers will take the more convenient route – and that is likely to be online.
What needs to be fixed in the online print sector in 2017?
First work-in-progress: Mobility. I never tire of emphasizing how important it is to provide every online print offering in mobile format. Yes I know that a lot of folk laugh at me for saying this – but when I look at buying behavior in my surroundings, then my conscience lets me return the compliment with a friendly smile. For me one thing is very clear – mobile is now one of the main sources of information for the dynamic client.
Second work-in-progress: Quality. Speed and low cost are one thing – but as our tests (the results of which we will publish in January) show, we identified a horrifying standard of print quality at most of the online print providers we tested. The “cheap” online print providers stand out particularly in this respect – the customer has to decide. Logistics failures even occurred in one test, meaning that we received print products that we never ever ordered. So there is still room for improvement here.
Third work-in-progress: Staff. So long as we in the print industry are at loggerheads with each other, and we are only concerned with issues like who is undercutting who on price, who can print better and how, how the industry is suffering, we shouldn’t be surprised that the print industry has seriously lost its appeal to many young people. Only the major online print providers now understand how to unearth and nurture young talent – and SMEs: no chance. Something needs to be done urgently in this respect – by the industry associations too. The industry needs professional eCommerce expertise and qualified professionals.
Fourth work-in-progress: Automation. [As an aside: on a recent visit to a print company, which I was kindly permitted to visit incognito, I was accused quite remarkably by a manager (who obviously didn’t know me) “of being unbelievably ignorant about automation”. There may well be a tiny grain of truth in that, but this kind of behavior is now almost symptomatic of what some print specialists are like. Not talking to each other, but about each other instead. Where’s the fun in that? Especially when important issues like automation are involved…]. Nearly every company has a massive amount of catching up to do. Here too there are solutions: you either invest or you at last get round to talking to your fellow print provider just round the corner to see if it would make sense to team up and if necessary establish a collaborative venture. Not everybody must be able to do everything themselves – but if you haven’t by now grasped the fact that your competitor is no longer the print provider just round the corner but actually any print provider operating online – then trite appeals are not going to help any more.
Fifth work-in-progress: Less self-centeredness please. The eBusiness print market is so huge and provides any dynamic, progressive entrepreneur with a host of opportunities. De facto, there has never been a situation like this before. So why these permanent displays of self-centeredness? Folks – talk to each other, share information and viewpoints – that’s the only way to learn off each other and to differentiate your business skillfully. Yes, we’ve got cutthroat competition, and yes the competition never sleeps. But if you still believe that you can conceal or hide your production methods, check out YouTube quick to see if a film about them hasn’t already been published. Business intelligence, not machinery, is the key in the age of eCommerce. We’re talking concepts and manpower – not just about who can do the fastest creases.
So is the outlook really that bleak, Mr. Zipper!?
No. I believe that we as the print industry have never had so many opportunities as have been presented to us in recent years. The sub-contracting industry is offering new products incorporating a high degree of automation, inkjet is becoming more and more of a game changer, many customers are rediscovering print as a sound advertising medium, young people are buying books again (because they are not subject to power cuts), people are prepared to pay for high-end print again – if sold skillfully and eBusiness print is providing new opportunities, almost irrespective of location. At growth rates of between 5 and 18 percent, the billion-Euro online print market in D/A/CH is a lucrative business. And online print will also take advantage of almost unimaginable market opportunities to conquer new segements in 2017 and ultimately revolutionize, or should I say evolutionize, the entire industry. Step-by-step.
On that note – Good luck! Here’s to a successful 2017.
Yours sincerely
Bernd Zipper
