By Chuck Gehman
This series of articles will explore the new e-commerce companies that are taking the printing industry by storm. From print buying to supplies procurement, there are new “dot com” companies that want to put themselves in the middle of almost every transaction a graphic arts company will make.
At this writing, there are at least 40 Internet companies addressing the specific needs of the printing industry. The most incredible fact about that number is that as recently as last year at this time, most of us would be hard pressed to identify even one company that could be described as a printing industry e-commerce company. Even more astounding is that more of these companies are launching their businesses seemingly everyday.
Some of these companies are “dot com” manifestations of traditional printing industry businesses; these include distributors and actual printing operations who instead of having “brick and mortar” operations choose to place their customer-facing operations on the world wide web. Some sell paper or operate exchanges for other commodities and chemicals.
But perhaps more interesting and controversial, especially to the printer or trade shop in our industry, are the companies that intend to put themselves in the middle of the transaction between buyer and seller. These companies will charge a fee to facilitate the exchange between the buyer and seller. Perhaps the biggest question we’re hearing is: do these companies provide enough value-add to our operations to justify taking a percentage of our sales. Another big fear among printers is that these companies will turn their business in to a commodity, making all the value-added services (and even personal service itself) disappear as a component in the customer relationship, leaving price as the buyer’s only consideration.
In this series of articles, we’ll attempt to give you enough information about these companies to make an educated decision about whether or not there is a value proposition in all this for your company. In this article, we’ll help you identify key companies in the marketplace, what they do and how they operate.
e-commerce business models
For the most part, the graphic arts industry e-commerce companies are all considered “business-to-business” plays (also called B2B). There are basically four different types of business models that are currently in use for B2B companies.
Forward Auction. What most people think of when they think of an auction; sellers post descriptions of products on a web site and buyers post bids to offer to buy the product.
Reverse Auction. Made popular (perhaps “invented”) by Priceline.com. Buyers post descriptions of products and services that they desire to purchase, and companies review the postings and offer (or perhaps do not) products at that price.
Internet Exchange. In this model, multiple buyers and sellers come together in an e-commerce system. A match is made between buyer and seller, with the exchange garnering a transaction fee.
Digital Marketplace or Linked Exchange. This model involves multiple exchanges sharing information and transactions, and paying each other fees or percentages for completing customer transactions.
To get more detail on each of these business models, read “Ways of Doing Business” by Greg Dalton, in the March 6th, 2000 edition of Industry Standard magazine. In addition to those listed, a couple of other strategies have emerged in the graphic arts arena. These are:
Bulletin Board. Basically, a place on the Internet where buyers can post RFQs and sellers can read them and respond. This is a very loose definition of e-commerce; since basically, you are paying for the privilege of exposing your RFQ to a larger audience (as a buyer), or for the ability to see RFQs from a larger customer community than you may be exposed to by your normal sales channels.
Storefront. An e-commerce company provides a printing company branded e-commerce site, and provides all the backend logic and processing. Makes a company look like they have their own elaborate e-commerce system, but in fact they are using the e-commerce provider’s systems.
Companies serving the graphic arts industry
The sheer quantity of startup “dot com” companies vying for our business makes identifying and categorizing these companies a difficult task. And since their names are not often descriptive of what they do, it makes life even more difficult. For the purposes of our discussion here, we’ve broken down the various industry e-commerce companies into three distinct categories. These are: 1) Intermediaries, or companies that are attempting to broker transactions between buyers and sellers, 2) Online printing companies and 3) Companies selling supplies or trading commodities.
The Intermediaries
Our first category of e-commerce service provider is the intermediary. These are the controversial companies that want to inject themselves in the middle of your transaction and take a fee or percentage of the net or gross of the job.
Table 1 provides information about 11 of the most prominent companies providing e-commerce services to print buyers and sellers in the graphic communications industry. within this category of provider, you will see three prominent models in use by companies addressing our industry: Forward Auction, Bulletin Board and Internet Exchange. In addition, you’ll see multiple e-commerce companies coming to market using the storefront type of offering.
In a future installment, we’ll go into detail about what makes some of these companies unique, and get some feedback from their executives about their approach to the market. For now, let’s just examine what the benefits might be for your company in each of these approaches.
58K.com claims to be the printing industry’s only auction site. This claim appears to be true. Their homepage lists numerous features and benefits to both print buyers and sellers, as well as providing a small window into some of the auctions that are currently taking place in their system. The biggest criticism of auction-style e-commerce is that price is the primary motivation of the buyer, and the sellers may have a difficult time differentiating their products in any other way.
Httprint.com, Printbid.com and Printmarket.com are all examples of bulletin board systems. These systems are typically free to the print buyer, and charge a very small fee to the printer (see table 1 for examples of fees.) However, these systems do not offer a lot of functionality to either community: the primary benefit to a buyer would be to get a larger number of responses to RFQs, or an easier way of distributing them. To the seller (printer), the primary benefit might be more jobs to bid on.
The Internet Exchange category is represented by Impresse.com, Noosh, and Printcafe and Printmarket. These companies appear to be the most heavily funded and most aggressive of all the players attempting to address our industry. They also are generating the most controversy, primarily through their fee schedules (seemingly slanted toward charging the printer more) and their aggressive selling to the print buyers. However they are also offering numerous benefits to both buyers and sellers, and have only just begun to roll out the wide range of features that they have planned for their systems. Impresse and Noosh both come from the high-tech world, with executives from e-commerce and database companies at their helms; Printcafe is a unique conglomeration of graphic arts industry hardware and software companies.
Finally, the storefront approach is being implemented by Collabria (the most prominent player in this category), Mediaflex.com, and Printchannel.com. These companies charge an upfront fee to create the web site and e-commerce environment for the printing company, then take a small transaction fee (typically a flat fee) for jobs completed through the system. These systems are appealing to printers primarily because they preserve branding (“I’d rather have my company name in the buyers face than someone else’s”). However, this could backfire if buyers gravitate to the exchanges, because no one wants to have to learn how to use lots of different systems to place an order.
Online Printing Companies
The next category of industry e-commerce companies are the online printing companies. We’ve compiled a list of six of the more prominent players in this category in table 2. Some of these companies are Internet manifestations of existing companies that have been around for many years (namely, e-printshop.com and Easiest.com).
Postcard.com has been doing “e” a little bit longer, by virtue of the fact that they have always operated as a virtual printing company (doing business via 800 numbers primarily and aggregating small jobs to larger printers).
Imagex is an Internet-oriented companies that has executives from high tech, is well funded and moving aggressively into many different segments of the market. Imagex is a unique public company and they have purchased quite a few other graphic arts/Internet companies in the recent past (most recently Creativepro.com); we’ll talk about Imagex in particular and their various companies in the next installment in this series.
Mimeo is a company whose young executives are from the Internet world. Founder and CEO Jeff Stewart (30 years old) could be described as a “serial entrepreneur.” Iprint.com is also an Internet-oriented company whose founder came from one of the earliest Macintosh software companies and offers an easy way to buy the most basic printing needs that a small business might have.
In a future article in this series, we’ll talk to some of the executives of these companies and get their impressions on the directions the industry is going, and how they feel they will be affected by the emergence of the various e-commerce models and exchange-type companies we discussed earlier.
Buying supplies online
Finally, several companies have emerged that are selling or providing exchange or auction sites for the commodities and supplies that are used by our industry. Table 3 lists seven of these companies, their mission and scope. Paper seems to be the “hot commodity” for e-commerce in our industry, with five of the seven companies focused on this segment of the marketplace. We’ll talk more about these companies in a later installment.
The other two companies, Printnation and Street-price.com are taking aim at the traditional graphic arts distributors. Perhaps the most amazing thing about this category is that none of the large, existing distributors have publicly shown any interest or technology for providing their products and services over the Internet. The biggest criticism of these new “dot coms” is that they have missed two of the largest reasons why people do business with the traditional distributors: First, because they are “the bankers of the industry”, providing credit and consumables rebate deals to help service providers make ends meet and second, because their “feet on the street” and personal relationships mean so much to companies in our industry.
Summary
We’ve established the basis for discussion of this fascinating new world of Internet applications for our industry and identified some of the key who want to forever change the way we all do business. In our next installment, we’ll get to know some of the executives of these companies and talk to some of their customers.
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