INTERVIEW: OUR BEST PRICE STRATEGY IS WELL SUITED TO THE MARKET

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The Red Print Group is a new online printer on the market. Behind it is a company that is no stranger to the market, Druckhaus Mainfranken. Moreover, the red printers from Lower Franconia unapologetically declare themselves to be price makers. Is this just marketing bluster or is there really something behind it?

It’s January 2021, and Germany is in the midst of an unprecedented pandemic. The retail trade, pubs, restaurants, and hotels have closed, and cultural and private life is either at a standstill or severely restricted. No concert posters, flyers, menus or invitations are being printed – print shops are at the bottom of the barrel or well below the limit. And it is precisely at this time that a new online print shop is starting up. And not exactly the smallest of them.

Bernd Zipper learned about this previously well-kept secret and asked Ulrich Stetter, Managing Director of Druckhaus Mainfranken GmbH in Marktheidenfeld, what and who was behind it.

Read a shorter version of the interview here or listen to the full conversation in the podcast on ZIPPERS INSIGHTS or Spotify.

Bernd Zipper: Ulrich Stetter, as of late you are not only the Managing Director of Druckhaus Mainfranken in Marktheidenfeld, but also “Head of Red Print Group”. Is that right?

Ulrich Stetter: Correct. But the “Head of Red Print Group” doesn’t quite roll off the tongue yet. It’s a new brand from Druckhaus Mainfranken, which we launched on January 7 and with which we still have a lot of plans.

Bernd Zipper: Druckhaus Mainfranken actually defines itself as an industrial printer. All processes are fully automated, using advanced technology, and now an online portal is being added. How does that fit together? Have you become e-commerce experts in a hurry?

Ulrich Stetter: Not in a hurry, it developed over time. There was a lot of demand from colleagues in the market for certain services, because we offer technical printing topics that not everyone is familiar with. As a result of these inquiries, we then set up our own sales team about four years ago to deal with such requests. This has continued to develop, so we said, “Now would actually be the right time to take the next step.” And now we are offering the whole thing on a website.

Bernd Zipper: Website is probably an understatement. It is already a complete store with stored prices, calculation options, I can order express and so on.

Ulrich Stetter: Exactly.

Bernd Zipper: But there is a major question for me. It’s the beginning of 2021, and the printing industry is in deep trouble because of Corona and its effects. Is this the right time to start a new online project?

Ulrich Stetter: I think so. Firstly, I think we fit the market particularly well because of our price sensitivity. And secondly, this offering is for experts: a quick, easy selection, not too broad of a product range, but high quality. I think that fits quite well.

Bernd Zipper: But you also have exotic products. I’ve seen that you even offer stickers in the shape of a man or a bear.

Ulrich Stetter: Yes, which a laser can also cut out.

Bernd Zipper: When did you make the decision to go online?

Ulrich Stetter: The decision to go online was made at the end of September and then we started by choosing a provider for the web shop. Our choice fell on Lead-Print. Active work began in mid-November. Getting live by early January was a wild ride in itself.

Bernd Zipper: So, this was a real fast-track project that you managed to pull off together with BeBeyond and the product Lead-Print?

Ulrich Stetter: Exactly. Yes.

Bernd Zipper: We recently published an interview with André Hausmann and his company. Was that decisive for your decision?

Ulrich Stetter: It was at least not incidental.

Bernd Zipper: For instance, they have now also implemented the portal for ‘WmD’. Was that a reason for you to say, “These are the right people”?

Ulrich Stetter: No. We looked at it and had the feeling that it would fit, also in terms of the size of the company and the contact partners. We are quite a family business, so it is always important for us that the atmosphere is right and that we feel we can work together. The flexibility was very high and, as I said, we were able to implement it quite quickly.

This was despite the fact that we already had some changes compared to the standard jobs. The store itself also involved a lot of work: a lot of texts and a lot of content had to fill the whole site. And it’s just as important that the products can run in the workflow and be produced. But the commercial side was the larger part.

Because we attach great importance to processes. I can’ t say anything about accounting after the fact, but I did a great job up front. The accounting side also has to be right: Accounting, legally compliant invoices, electronic archiving and so on. Those were actually the bigger tasks for us.

Bernd Zipper: Going back a little, you said that you are price sensitive. Is that so? If you look at the prices and you don’t necessarily need overnight delivery, you could almost call it a low-price strategy for most products. Or is that now the norm among online retailers?

Ulrich Stetter: No, I would rather call it a best price strategy. With our technology, processes and so on, we already claim to be the best. But in terms of cost leadership, we do believe that we still have a lot up our sleeve. However, we also have to get this on the road.

Bernd Zipper: If you compare your machinery with that used by other suppliers, your competitors would definitely be in a position to offer even lower prices. Do you then follow suit in terms of pricing policy, or do you take the position “No, that’s my price, that’s the best price I can offer”?

Ulrich Stetter: We do not have the plan to play such games every week. But I think we are very competitive in terms of equipment, machines and prices. The overall package, where we can play off our size, and the economies of scale associated with it, fit. I think it’ very well rounded.

Bernd Zipper: Now there are many who say “Okay, if it’s so cheap, then the quality will fall behind”. How can you make sure that the quality stays great? Or do you say the same as – to put it mildly – other low-cost online printers: “Shit in, shit out”?

Ulrich Stetter: No, we don’t say that because we have our own standards. We come from a printing background, we come from a technology background, and we’ve been doing this since 2006 and can say with a clear conscience: “The quality is right, we know it”. In any case, the customers we have been serving in this sector for the past four years are delighted. The issue of quality is not up for discussion.

Bernd Zipper: And your customers can now deliver directly via the portal or directly via an API?

Ulrich Stetter: Exactly – and that is actually our focus. The store has two functions for us. First, of course, it’s a classic print web shop. In parallel, we also see it as a showroom, a trade fair or exhibition hall for our capabilities. So, we can send out offers to resellers at any time or a link with the request “Have a look!”. We’ve already seen in the two weeks since January 7 that feedback comes pretty quickly when we send out a link. Many say “Oh, let’s talk, you’ve got something really interesting”.

Bernd Zipper: Is your offer only valid for Germany?

Ulrich Stetter: We have now opened the store for Germany. But these links are also about contacts in the European market.

Bernd Zipper: Even in the English market?

Ulrich Stetter: It is perhaps not the best at the moment. We would like to supply it if the courier drivers could travel. So, the English market is certainly not our focus. Now we have to wait and see when the carriers say they will drive again. Then we will certainly have another look at it. But right now, of course, it’s not necessarily a great situation.

Bernd Zipper: Typical customers of open webs hops are often small pizzerias, restaurants or events because they need flyers. If I understood correctly, your target group is more likely to be made up of colleague businesses and resellers.

Ulrich Stetter: Well, in principle we are open. We cover the market and the needs. On the other hand, we know our customers from previous production. These include resellers and large online stores. Private customers are certainly not our focus, that’s clear. But otherwise, we are open and will see what comes from which channel.

Bernd Zipper: Experience shows that if you’re in the B2C sector, you need a call center where you have to answer a lot of questions.

Ulrich Stetter: We are still learning. When we developed the concept and the pricing strategy, we knew that we were very attractively priced. But then I can’t offer full service, deliver on the same day and staff a call center with ten ladies and gentlemen for technical advice. We also don’t offer the option of invoice purchasing at the moment, because that’s another additional process that costs money. But of course, these are all areas where we are learning. If it works with the concept we have now, then it’s good. And if everyone calls and says, I’d love to, but I need invoice purchasing, then we’ll just have to adapt. We have to observe that. We’re open at the moment, checking what works and then adapting flexibly. That’s also the advantage of working within a group.

Bernd Zipper: Keyword group. Who else is in the group now that the start-up is called Red Print Group? At the moment, it’s Druckhaus Mainfranken.

Ulrich Stetter: Yes, but Druckhaus Mainfranken is already a group. We also have four other companies: three commercial print shops and various companies. We have Schleunungdruck on board, we have the Thieme print shop and the Wenng print shop, and we also have a specialist publisher in the group. That is the group and that is also the blend that helps us. One example: Red Print Group and Druckhaus Mainfranken do not have a graphics department. However, we needed designers to set up the website, the templates, and the design, etc. We were not able to do this ourselves. But Schleunungdruck has them – that is now our graphics department. When you can help each other in the group like this, it makes the whole thing well-rounded, of course.

Bernd Zipper: Let’s talk about pricing policy again. The big online printers in particular like to claim that “the market is closed, there’s nothing left to be gained from it. You’re now trying to do it via the pricing strategy – is the market already closed to online printers?

Ulrich Stetter: I don’t think so. For one thing, we saw that two, three, four years ago, colleagues joined the market. I also think that the market is still open and that it is simply a question of orientation, product range and strategy that determines success or failure. We know manufacturers with a very, very broad portfolio, we know the low-price track, there are specialists with a less broad portfolio and so on. And in between, I think there is still room for us.

Bernd Zipper: Until now, you were also a custom printer for a relatively well-known online printer. Is this partnership now a thing of the past, or are they simply a customer?

Ulrich Stetter: We don’t see ourselves as individual printers. Thieme, Wenng, Schleunung – these are the individual printers for us. We are the industrial printer. And of course the partnership is not obsolete, it is of course an important mainstay. This has also been agreed with the customer and does not interfere with the new design.

Bernd Zipper: We are therefore curious to see how this will develop. In any case, it’s quite red for you. The corporate design is directly reminiscent of someone else. But that remains to be seen.

Ulrich Stetter: During the design phase, we also thought about pink, imagined the clothes we would all be wearing, even the pink shoes – and then changed our minds at short notice and decided on red after all.

Bernd Zipper: Franconia seems to be a kind of hotspot for online print shops.

Ulrich Stetter: That’s right, there are two areas in Germany where several hotspots are located: One is Franconia and the other is the Dresden area. We are represented in both regions with our plants and are quite well networked. We know our way around there quite well.

Bernd Zipper: Why this concentration? Precisely why did these two metropolitan areas emerge? Because you were looking for a partner just around the corner?

Ulrich Stetter: No, I think it was a coincidence. You’d have to write a book about it. Start in 2000 or a little earlier, about how it all began.

Bernd Zipper: I like writing books, but I always look at how well they might sell. Here, however, I already see a very narrow specialist audience.

Ulrich Stetter: Maybe, but you could write really gripping books about how it all went down. When I think about the start-up phase from 2006 onwards – that was a wild time. In 2007, we built two plants, one in Greußenheim, which is located between Markheidenfeld and Würzburg. And then, in the same year, the plant in Klipphausen. In Klipphausen we had an empty hall, a desk and two chairs. I went there every Friday and conducted job interviews. I can still hear myself saying: “Listen, here’s an employment contract, we’ll start in four weeks. And the whole thing in a completely empty hall! It took a certain amount of convincing. Either it was me or the great atmosphere. In any case, I still admire our employees who allowed themselves to be convinced back then. Many of them are still working there today.

Bernd Zipper: The whole story is fascinating at any rate. Even though we have become accustomed to the fact that many things happen much faster in times of the Internet, I believe that prior to that, a development like the one you have experienced would have taken a few years longer. The Internet was really a fire accelerator.

Ulrich Stetter: Absolutely right.

Bernd Zipper: And today? How do you see traditional print shops now? Do they still have a chance of surviving on the market?

Ulrich Stetter: I think so. We see it with the print shops in our group or with partners. Their big advantage was that they were able to see more quickly what was shifting away. They were able to change more quickly, make other products and say to certain customers: “Come on, we’ll order this online, no one has to come three times with paper samples.

Last year, the crisis year, was proof of the stability of traditional print shops. That was a good one. The online business slumped very quickly and very badly. The commercial printers went right ahead for three weeks, including weekend shifts, when online was already in the dumps. Then online came back relatively quickly. This mix is what makes our group so interesting. We have geared each company to a specific focus.

For example, user manuals. We are very strong there, but that doesn’t have so much to do with printing. There’s not a lot of color on them and there are no special images or requirements. It’s more of a one hundred percent logistics story. Having the right operating instructions on the assembly line at the right moment, for packaging. That’s the challenge. In other areas, we have products that are attached to online retailing. Those have skyrocketed in the last year, of course.

That was certainly one of our big advantages last year. One was the flexibility, that we could make decisions quickly and implement them. And the second big advantage was the mix. The waves that hit us all together were different in terms of the time period and the intensity. And a lot of things evened out.

But back to your question: As a commercial print shop that has no orientation, I would say it is difficult and it will become even more difficult. I can list a lot of products that are ongoing, and people will order them online – in closed stores, for example.

But the consulting and everything that is attached to this concept is something completely different. That’s where we need the experts! At Schleunung, we have now built up a book section that is quite exciting. But these are special books. Then we have finishing in the group and digital finishing options at Druckhaus Mainfranken that the others can use. This combination makes it very, very exciting. We also see opportunities there, so we’re not in any way saying we’re throwing in the towel.

But as I said, there has to be a clear direction. That’s why we keep asking companies to sharpen their strategy and see where they’re headed. At Wenng, for example, we have now completely abandoned commercial printing. We are focusing on innovative dispensing products, certain combinations of sticking, numbering and so on. There’s really no place for commercial printing anymore.

Bernd Zipper: Of course, you are lucky that you can specialize in the group. But if you’re an overall player with less sales, in the range of two to eight million, you’re probably not going to be as flexible and be able to rotate.

Ulrich Stetter: Nope, certainly not.

Bernd Zipper: How do you see the chances with your associates? Will they only be taking orders for online printers in the future?

Ulrich Stetter: It’s difficult and depends on a number of factors. Specifically, last year: We really have a super team, with three people in occupational safety, and they immediately initiated the Corona measures in March. In the evening, a resolution was passed in Berlin, and the association translated it for practical use. We got the notice in the morning, immediately got together and implemented the measures.

Or now: Wednesday morning, after the decisions are made at 8 o’clock, we sit down and ask: “How are we reacting, how far are we with home office? Have we implemented that so far? Are there any gaps somehow?” In this case, the answer is no. We have implemented all of that now. We no longer have any need for adjustments. A half an hour later, at 8:30 a.m., Zack sends an e-mail out to everyone: “Guys, we have agreed, no changes. Or there’s a new pandemic plan or some changes for the plants in Saxony.”

But in addition to these daily requirements, we do energy management, and we have to update the certifications for PFC, FSC and CO2 offsetting, study a new packaging regulation here and there – and there’s also a bit of data protection. These are hobbies we love.

Why am I telling you this? Because I wonder how a company with 30 or 40 people is going to manage all these tasks. Who’s going to do it?

The 10-man print shops are more relaxed about it, they don’t see it so narrowly and are flexible. They order from us, do a lot of work on the data and a bit of processing, or take the business cards over to the right floor of their customer’s offices. They have already found their niche. But for those between 10 or 20 and 50, it’s difficult from our point of view if you’re not part of a group. There’s something added every year. If the general manager is supposed to do all of that – when does he take care of his customers and his business?

We experienced this in a specific way in the group last year. Short-time work applications took two hours for five companies, because we learned once, filled out the form five times, got the five stamps out of the drawer and were done. And always going back to each other when there were new requirements. Let’s say someone had to be hired on short time or we had a vacation, illness or quarantine: Then everyone learned from it immediately. And that’s when we really exploited these economies of scale and these advantages.

Bernd Zipper: Is that perhaps a survival strategy for smaller print shops in particular: joining forces with others? There are already such tendencies.

Ulrich Stetter: Of course. And I think it’s necessary, because I imagine it would be very difficult to do it all alone.

Bernd Zipper: Now there are also a few new players in online printing, Print.com for example, which entered the market last year. How do you rate the new players? print.com is purely a reseller.

Ulrich Stetter: I don’t know. But we see specialization. We believe that a lot will happen in the packaging sector. That’s still a wide field. I believe that there is still a lot of room for improvement in specialization. There is no need for the tenth company to offer exactly the same thing all over again.

Bernd Zipper: And closed stores? Is that a model?

Ulrich Stetter: They have less of a tradition here. In France or other countries, however, they are more common. You have to register there first. I don’t think people like that here. Here, the customers want to look at the page, see what the stuff costs, and that’s it. But to say, now I’ll register first and see what’s underneath? Probably not. Or that I even need a recommendation to join in the first place: I don’t know. We don’t have quite the tradition that perhaps other countries do.

Bernd Zipper: In France, I think, there is such an elitist approach.

Ulrich Stetter: Yes, yes, exactly. That’s where you first need an invitation.

Bernd Zipper: But this whole issue of B2B stores, i.e., dedicated stores for individual companies, is really booming at the moment. I know from my own consulting that a lot is happening right now. Because many say we no longer want to be dependent on a printer. We want a store in which we can connect three or four printers. We don’t care who prints. The main thing is that we have our own platform. Do you have any answers?

Ulrich Stetter: Yes, together with Lead-Print, there is already a new project that goes exactly in this direction. With these platforms, of course, you have to be very careful that it doesn’t become a price story where every printer enters his price and the cheapest gets the job. Whether that’s such a great idea for the producers, or for the manufacturers, I don’t know. But there is indeed already some movement in this direction.

Bernd Zipper: We’re still in a market where we’re talking about around 18 billion in print sales in the German-speaking countries alone. And I’m not even talking about any special print products such as wallpaper or decorative printing or whatever else is on the move. That would make the figure even more gigantic. You are also on the road in Europe. You are involved in Intergraf (European Federation for Print and Digital Communication is the European association of national interest groups in the printing industry. Editor’s note) and also have a rough overview of what’s happening in Europe. How are things going in Europe? After all, you have good contacts because you’re a networker.

Ulrich Stetter: We had the last Intergraf meeting in November. That’s always an exciting event, because you exchange ideas and know that some of the problems are shared by everyone. On the other hand, there are also the special issues in the markets.

For example, you can’t even ask about England at the moment. What’s going on there is a fiasco. Everything seems to be coming together there now. When printers say, “Now I have to see how I’m going to order my paper,” that speaks volumes. So when we lament about lockdown in this country, we should take a look at England, then we’ll know what lockdown means. Colleagues tell us: “I have my customers in the London banking district, but every week one of them has their moving boxes in the office”.

Sweden has also been affected a bit more recently, because they didn’t expect it like this. On the other hand, Italy and France, have actually been relatively positive or mixed. The Netherlands has real price wars and real battles. And yes, Portugal, for example, is doing very well, very well. They, again, have benefited from the weaknesses in Spain. So all very different in the euro area. In the first half of last year, book production in Estonia, Latvia and so on really benefited because European publishers were very cautious about the Far East. They didn’t know when the goods would come, would they come at all?” And then they order in Estonia or Latvia. And then, of course, it’s different again in terms of the industries and the orientation of the companies.

Bernd Zipper: Do you think – because we’re on the subject of Corona – that the idea of the Red Print Group would have existed even without Corona?

Ulrich Stetter: I think so, because we have already been working on this track for the last four years. Just not online. So, there is undoubtedly a demand for the things that we do particularly well. We have a few products that also performed above average in 2020. Who would have bet on an envelope ten years ago? No one. The overall development of envelopes is actually pointing downwards, because people hardly ever send out invoices anymore. And then we see these print runs.

It’s always such a struggle, where you also think you have to discuss this with the machine suppliers. And they say, “No, no, what you’re planning is not possible at all. Then you implement it anyway. And then very quickly you have five machines. We no longer need to talk about setup, because we basically have a machine for every format.

We still have a few products in the drawer where the markets are still unfilled. And the combination of short runs, fast and yet cost-effective – there’s still a lot that we can do. Especially in terms of automation. Last year, for example, we experimented with a robot that shakes the sheets and so on. We got a few ideas up and running.

Bernd Zipper: Where do you stand in terms of optimization? Where do you stand with makeready times in offset printing, for example?

Ulrich Stetter: We are somewhere below five minutes, 3 minutes 50 seconds, 60 sheets of waste. It’s logical that we always have heated discussions with digital printing about where to draw the red line? That’s where we are in print and that’s where we have come a long way. According to the current state of technology and knowledge, we are perhaps at 95 percent or something like that. In the periphery, automatic plate coating is still to come this year. And there’s still a lot of room for improvement, especially in postpress. But there again, I need the economies of scale, I need the masses.

If one machine is used to capacity in a single shift from the volume that is produced every day, then the figures become relative. It doesn’t work to utilize only one-third of the machine fleet. We simply have an advantage in terms of size, and we will continue to exploit this.

Bernd Zipper: I can still remember it well: About 15 years ago, I was giving a talk somewhere about online printing. Then a printer came up to me and said it was a disgrace what I was doing. I would ruin the printing industry. You are active in the association and also work with many colleagues. When was the last time you heard something like that?

Ulrich Stetter: That was pretty much 12 years ago. I won’t use the swear word now, but someone came up to me and said, “You’re ruining me with your letterheads. You can’t print 1,000 letterheads for 20 euros!” I told him, “You can’t either, but for 25 euros, then somehow it works.”

Two years later, we had a great event with the Saxony, Thuringia and Saxony-Anhalt Association. Instead of the planned 25 registrations, we suddenly had 60 people. Michael Deml was there at the time and we said: “Uh, this is going to be a hot one, they’re going to kill us. And then they went in there, huge interest, great atmosphere, printers between 10 and 50 people and everyone happy and in!

Then we go through the technology and then the same colleague as before says: “Oh, that’s where my envelopes come from and oh, that’s where the posters are. I can’t print them with my A3 machine. In other words, everything is completely relaxed. And the end of the story? They all said, “Now we know where it all comes from and how it’s produced. And yes, we will now also order from you.

In that respect, everything has turned around and I think the time is over today when someone says, “Oh God, they’re ruining us.” No, I think we’ve become an important part of the printing industry, we bring new products to the market and reach new target groups. So I don’t think we have to hide anywhere.

Bernd Zipper: Of course, that has a great effect on the customer: “He knows me, he knows what I want”.

Ulrich Stetter: Yes, exactly.

Bernd Zipper: Maybe that’s not such a bad thing for the business you’re running today.

Ulrich Stetter: Yes, we have a good contact to the customers. Simply because we listen. I think that’s the secret in commercial and online printing: looking closely at what the customer wants.

In principle, it’s comparable to the success of online printing. It benefited because print shops at that time forgot something important: to ask what the customer wants. Just one example: I contact the print shop and after ten days I get an offer in which I don’t understand half of it. At the time, this was the path that online printers took.

Bernd Zipper: I wish you every success with the Red Print Group. And with Druckhaus Mainfranken, of course, which is one and the same thing. I’m curious to see how the market reacts and how things develop. I can also tell you that we have already looked at doing the first quality tests. But I think you’re relaxed about that, aren’t you?

Ulrich Stetter: We are very relaxed about it. Because we are well on our way, we have a good team in the lab, and we experiment a lot with materials so that we know exactly what goes in and what goes out. We are very relaxed about that.

Bernd Zipper: I think that’s cool. You guys have also already achieved the top way into ZOPI. That is the Zipcon Online Price Index, which will be presented in the coming days. But you won’t be included until the middle of the year. Nevertheless, you are on the backlist, so to speak.

Ulrich Stetter: Okay, very good!

Bernd Zipper: With the ZOPI, we put together a basket of goods to determine what the average price is. Not to say that’s the price now, but as an indicator of whether prices are rising or falling. And the good news is that there are indeed some products for which the price is rising, even among online printers.

Ulrich Stetter: Yes, we’ll have to take a look. The year remains exciting anyway – including the development for all of us. In this respect, we have to react more flexibly to everything that comes along.

Bernd Zipper: Ulrich, thank you from the bottom of my heart. Thank you very much. Bye, Pfiat di, Ciao.

Ulrich Stetter: Ciao, take care, stay healthy! Ciao.

Summary
INTERVIEW: OUR BEST PRICE STRATEGY IS WELL SUITED TO THE MARKET
Article Name
INTERVIEW: OUR BEST PRICE STRATEGY IS WELL SUITED TO THE MARKET
Description
The Red Print Group is a new online printer on the market. Behind it is a company that is no stranger to the market, Druckhaus Mainfranken. Moreover, the red printers from Lower Franconia unapologetically declare themselves to be price makers. Is this just marketing bluster or is there really something behind it?
Author
Publisher Name
Beyond-Print.net

Klaus-Peter Nicolay is the publisher and editor-in-chief of the trade magazines "Druckmarkt" and "Druckmarkt Schweiz" as well as the editor-in-chief of "beyondprint unplugged". He writes for his own publications, writes specialist books and publishes articles in almost all relevant trade magazines in the D-A-CH region. Active in the printing industry since 1970, the graduate printing engineer has been accompanying the industry as a journalist for almost 40 years. Due to his intensive contacts to the worldwide manufacturer and user scene, Nicolay knows the current market developments, and evaluates, presents and documents analytically the trends, facts and background of the printing industry.

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