Interview: Flyeralarm – Status Quo after the 2016 Reorganization

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Following the departure of ex-CEO Markus Schmedtmann, Flyeralarm, the No. 1 in the German online print industry, was extensively reorganized. Hartmut Kappes, CFO, explained the key points to beyond-print.de.

At sales of more than 300 million Euros, Flyeralarm is one of the drivers of the German online print market. In the last few years several attempts have been made to get the business to take more of an eCommerce approach and to let it grow/develop away from the fierce price war that is a feature of the industry. Following the departure of Markus Schmedtmann in 2015, who was responsible for the general management of the company while he was there and who frequently caused a stir in the market by making very “striking” statements, founders Thorsten Fischer and Tanja Hammerl decided it was time to restructure the company. This led above all to countless rumors in the industry. Flyeralarm usually “plays its cards close to its chest” and actually only issues press releases to announce new products and services. I wanted to get to the bottom of these rumors and got the opportunity to ask Hartmut Kappes, Flyeralarm’s CFO, a few questions. Here is the interview.

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Source: Flyeralarm

Bernd Zipper: Following the departure of Mr. Schmedtmann, senior management of the company was revamped. Among other things Dr. Christian Maaß left the company and joined Cimpress. What changes occurred during the restructuring process?

Hartmut Kappes: In terms of all the issues we had to consider, we felt it particularly important to embed the basic principle underlying Flyeralarm even more from an HR perspective and to grow even faster in future. Recruiting employees from within our own ranks to take up executive management responsibilities has always been a component of our corporate culture, and they have helped to make Flyeralarm the success story that it is today and to which we intend to add many more chapters! We are convinced that the restructuring action that we have taken is absolutely sustainable and will play a major role in driving continued growth at Flyeralarm. Previous structures were quite deliberately broken down. And we are now offering these very colleagues the opportunity to prove themselves at the next level up in our new organizational structure and to apply their skills, in order to ensure that Flyeralarm keeps on being successful. We are not only just talking about career progression opportunities, as happens frequently in other companies; we are putting our money where our mouth is.

Bernd Zipper: Following the restructuring, it initially looked as if both founders of Flyeralarm were again going to play an active role in determining the future of the company. Tanja Hammerl stepped down from an active management role a couple of months ago. What role will she play in future?
Hartmut Kappes: There is ultimately no change, Tanja Hammerl and Thorsten Fischer remain firmly in the driving seat and are of course involved in the operational side of the business. As part of the restructuring, which we initiated at the start of the year, we have taken the next step towards securing our future. From now on Thorsten Fischer will be the sole CEO of Flyeralarm GmbH, while Tanja Hammerl is responsible with immediate effect for the newly established Holding KGaA (joint-stock limited-liability partnership), which is the parent of Flyeralarm GmbH – we have therefore created a clear and above all up-to-date ownership structure. As Chair of the Holding Partnership Supervisory Board, Tanja Hammerl will first and foremost exercise a control function over all business/financial KPIs and she will also continue to be in charge of all production issues.

Bernd Zipper: Two years ago a really large building complex was acquired in Trennfeld, yet it has not been used to date – what are the plans here?
Hartmut Kappes: The premises in Trennfeld have significantly increased our flexibility. Even if we don’t currently have any production facilities here, we use the space primarily as warehousing and storage space. Here too we have become noticeably more flexible, and now have more latitude for expansion.

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“Flyeralarm is being bold and trying out new business models – other online print providers could do with being equally bold” – Bernd Zipper

Bernd Zipper: In the past 24 months Flyeralarm has initiated numerous projects. My3D was then closed down after only a year or so. A tender platform is now being launched. What projects will Flyeralarm continue to press ahead with in the long term?
Hartmut Kappes: I don’t need to spell it out that we will continue to expand our core print business. But we are working in parallel on going down the ‘full print service provider to our customers’ route. Trying out new topics has always been a driver of our business and culture. For example, we have now made a successful start to producing image and promotional films. Flyeralarm Moving Pictures has already entered the market, while mailshots or our social media events platform are also good to go. We will continue to test things out, have a wealth of new ideas, which we are also pressing ahead with accordingly. Our objective is to be able to offer our customers even more services in all segments to make them even more successful.

Bernd Zipper: The concept of a tender platform is not exactly new – what is special about the Flyeralarm approach?
Hartmut Kappes: Our concern, first and foremost, is to be able to offer our agency clients an additional, prestigious sales channel that supports them in the work they do. Our primary target audience is the professional agencies, which like us represent quality and actioning perfection.

Bernd Zipper: Is it wise as an all-round print and media provider to operate a tender platform? Isn’t it obvious that the competition won’t join in because they fear being treated unfairly?
Hartmut Kappes: No, because we have quite deliberately also set up a communication platform, which enables us to get in direct contact with the agencies. Furthermore there are so-called “Premium Agency Users”. We are able to communicate full-on here. We want to use our platform to address the problems that frequently occur in relation to competitors in this segment and arrive at a situation by means of quality assurance, where only “genuine” projects are transacted at Flyeralarm Projects. That is not consistently a given in the current market. Ultimately the agency should derive an added benefit – that is our objective. It made a promising start.

Automation, even in logistics, is a prerequisite for commercial success for an online print provider like Flyeralarm, Source: Flyeralarm
Automation, even in logistics, is a prerequisite for commercial success for an online print provider like Flyeralarm, Source: Flyeralarm

Bernd Zipper: The concept of a tender platform is not exactly new – what is special about the Flyeralarm approach?
Hartmut Kappes: Our concern, first and foremost, is to be able to offer our agency clients an additional, prestigious sales channel that supports them in the work they do. Our primary target audience is the professional agencies, which like us represent quality and actioning perfection.

Bernd Zipper: Is it wise as an all-round print and media provider to operate a tender platform? Isn’t it obvious that the competition won’t join in because they fear being treated unfairly?
Hartmut Kappes: No, because we have quite deliberately also set up a communication platform, which enables us to get in direct contact with the agencies. Furthermore there are so-called “Premium Agency Users”. We are able to communicate full-on here. We want to use our platform to address the problems that frequently occur in relation to competitors in this segment and arrive at a situation by means of quality assurance, where only “genuine” projects are transacted at Flyeralarm Projects. That is not consistently a given in the current market. Ultimately the agency should derive an added benefit – that is our objective. It made a promising start.

Bernd Zipper: The subject of mobile is becoming more and more important – Flyeralarm’s online platform however still has a long way to go before it is mobile-compatible?
Hartmut Kappes: There are not only plans, but also tangible packages of measures, which we will roll out in stages. Our online platform, which incorporates around 3 million single items, is aimed primarily at B2B customers. At this level of product diversity, providing a positive “user experience” on mobile devices is no walk in the park. The products are to some extent very complex and have to be explained satisfactorily. Ultimately long scroll lists on small displays would irritate customers pretty quickly. Incidentally the layouts for our products are usually created on desktop computers and also ordered from such computers. We therefore regard mobile device compatibility as being of growing importance in connection with order tracking and price enquiries.

Bernd Zipper: Flyeralarm also uses Tweak for artwork design purposes – what experiences have you had with this service? Where do you still see development potential?
Hartmut Kappes: We have had very good experiences with Tweak; this is validated by broad acceptance of this tool and by newly accessed sales potential. Customers from outside the industry, especially small businesses, but also private customers benefit from the fact that they can design their own print products without the need to have any particular prior knowledge. The aim is to enable small one-(wo)man businesses to order from us and be able at the end of the process to hold a professional print product in their hands. Our customers are also delighted by the speed and productivity gains provided, since the usual correction and checking cycles can be dispensed with. In future what will be key is enhancing the usability of this kind of tool further.

Bernd Zipper: A few years ago there were discussions with Bertelsmann about a collaborative venture and/or about a possible takeover – there are now more and more rumors that Flyeralarm is actively talking to an American investor. Would you like to comment on this?
Hartmut Kappes: The fact that all sorts of investors are interested in talking to us is not new. However our strategy is to remain 100 percent independent. And we don’t intend that to change, because the benefits of being an owner-managed and owner-characterized business are huge and a very important component of our success.

Bernd Zipper: Pressure in the online print market is mounting, price competition is getting stiffer – what response does Flyeralarm have to this situation?
Hartmut Kappes: The market has not yet been fully exhausted, it continues to grow. Gaining market share by competing solely on price is tough. It continues to be an overall package consisting of price, range of products and services, quality and delivery lead times, which has to appeal to the customer. We are acting accordingly – and our positioning is gradually becoming more broadly based. Month on month we launch around 20 new products on the market as well as a range of innovative services. We listen to what customers are saying and are very well aware of what they need and what they want to ensure a successful business future. We act accordingly.

My take: I wish that Flyeralarm would communicate more openly more often and provide an interested industry with more of an insight into current developments. The reason for that is – any other course of action gives rise to rumors. That’s because anywhere where people work – and a whole bunch of people work at Flyeralarm – rumors can materialize very quickly. While that might be good for PR and retaining the brand’s mystique, it’s bad for the online print industry as a whole. I wonder what will happen next in Würzburg as part of the ongoing reorganization and I’ll keep you posted…

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