Viewpoint
April 2005
Going in opposite directions
Demands for low pricing and one-stop shoppingare incompatible
It has been proven beyond doubt in this industry that if you want to make a reasonable or good profit, you should specialize. If you are not known for something, it’s hard to make a profit. Companies such as Davis + Henderson (personal cheques), Webcom (soft-cover books and directories), Winpak (packaging), Friesens (hard-cover books), The Printing House (quick printing) and The DATA Group are some of the most profitable firms in the industry. All have specialized. Even the giants in the industry have been specializing. Quebecor World, one of the largest printers in the world, has been specializing. It sold off Custom Cheques and BA Bank Note, and rumours are that it’s looking at selling its sheetfed operations.

There are obvious advantages to specializing. Better equipment utilization, better product knowledge, lower material costs and a better understanding of your customers’ needs. It also means being more price competitive. It looks simple—find a market niche, get the right equipment and go out and sell your specialty to the market. Your fortunes are assured. Well not quite.

The current trend seems to be that customers are headed in the opposite direction from dealing with specialized shops, as more companies want to reduce the number of printers they deal with. Instead of five printers they want to buy from one or two. I know a billion dollar company that went from using 27 printers to three. Requests for proposals are just a polite way for buyers to say they want to deal with fewer printers. Part of a company’s logic is that fewer suppliers means less paper work and fewer people required to do the buying. Also, I believe there’s an assumption made by a lot of customers that printers can print anything.

I know a number of quick printers who have been asked to print 50,000, 128-page catalogues in four colours in four to five days. Just maybe customers are commoditizing printing and/or do not have a clue what’s involved in buying it.

This one-stop shop approach has the added problem of the customer expecting the lowest price on everything: “I have given you all my business, so your prices should be lower than anyone else’s.” A six-colour 40" press should be just as cheap for a 16-page brochure as a two-colour business card? Interesting concept.

Some print companies have tried different approaches to handle the one-stop shop problems. The most obvious is to sub-contract the work that does not fit on their equipment. Unfortunately the margins are not nearly as high. Also if a printer is running around brokering work, he is not filling his own press time. Plus his prices will be higher than if his customer bought a job from someone who could print it in-house. Some print buyers have even hired outside purchasing companies to buy their printing for them. One of the banks has done this with mixed results. It takes longer to get jobs turned around and in some instances they get lost in translation.

Is the one-stop shop a business fad or it is here to stay? If the lowest price and quick turnaround are what count, it won’t last. The specialist ultimately has the advantage in cost, speed and knowledge. However, if simplicity, less paper work and less purchasing manpower are what count, then the one-stop shop will become a permanent fixture in our industry.
At the end of the day, lower prices, speed and the one–stop shop are headed in opposite directions. A printer still has to make a profit to reinvest or nothing is going to happen in the long run.
Alexander Donald is the publisher of Graphic Monthly Canada.
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