McIlroy--Where Are We Going On the Web?

Take a moment and ask yourself this question: What impact will the World Wide Web have on the printing industry in the next five years?

I'm going to guess what answer you gave. You're probably thinking that the impact will not be large. You're not denying that the Internet will influence many other industries, but there's just not much evidence that it's going to have a big impact on print.

That's certainly what I've been thinking—up until now.

The impact of the World Wide Web on printers has indeed been very slight thus far. In the last two years, about half of all printing companies have created Web sites (according to a PIA survey—and my own observations). Probably 75 percent or more of these firms have sales over $5 million, while perhaps only a quarter or fewer are quick printers. You get the picture.

These Web sites are little more than "brochureware." They comprise the online equivalent of the "capabilities brochure" of yore, and have about as much value. Every printing company feels it should have a Web site—just like every printing company feels it should have a capabilities brochure—even though this site doesn't really achieve anything. It was created more because it's embarrassing in omission, rather than out of any real expectation of benefit.

Site Unseen
Not many people bother to go to these sites because there's really no reason to visit. The "helpful tips" sections are mostly retreads of tired old trade articles from years ago. The "About Our Company" pages are dull and superficial. Need I go on?

A few customers use these sites for files transfers, and every now and again an inquiry is received from a new prospect. Most of the inquiries are a waste of time—they're either from novices who require too much handholding to be profitable, or they're from bottom feeders looking to get the lowest possible print price.

But while the printing industry remains unaffected by the Web, the same is not true about several other industries. According to Dell Chairman and CEO Michael Dell, who addressed his annual meeting in July, sales of Dell computer systems on the Internet grew year-to-year from $1 million per day to $6 million per day. That's over $2 billion in annual sales, roughly one-third of Dell's total. Also, Amazon.com has become a fast-growing book retailer in America, and one of the largest.

So obviously some industries have been affected enormously by the Internet. How can we categorize them? One factor is that high-tech products appear to be amenable to Web marketing, partially because the audience for these products is technologically sophisticated and willing to buy over the Internet.

The next factor is the commoditization of the product. A book is a book is a book. The major differentiation in book retailing in the last few years has been the scope of available inventory (hence the growth of the superstores) and price cutting (which every retailer has been forced to do).

Amazon.com moved into this space and was able to take advantage of inherent aspects of the Web to offer the widest possible inventory at competitively low prices (not necessarily the lowest). The company has been a runaway success from day one, and arguably is reshaping the entire publishing business.

So What?
That's all well and good, I hear you saying, but why should I care?

The questions to address regarding the printing business are: (1.) What market changes are already afoot? (2.) How can the Web facilitate these changes?

While it wasn't true five years ago, it can now be said that the average print buyer is relatively technologically sophisticated, and presumably is willing to consider using the Web to transact business. There are some holdouts, but let's just assume that the average buyer would be willing to obtain prices and place orders via the Web.

They would, that is, if what they were buying was a commodity product. The problem is that most printing is still a custom-manufactured product. With a wide variety of trim sizes, substrates, inks and bindings, there is no such thing as an average printed piece.

This is why the three most interesting Web-based print services—each taking a different approach—are focusing on two categories of product they consider commoditized: letterhead and business cards (with some attention to "product data sheets" as a potential third commodity category).

iPrint is a quick print store on the Web. It's happy to take first-time customers right off the street, and process a $25 order. ImageX is looking at larger repeat customers. Neither one actually does any printing, instead farming the mundane manufacturing out to a host of contract printers.

The third player is Digital-Net, which offers a custom software system to existing printers that, in turn, creates the infrastructure for printers to provide the same kind of services that iPrint and ImageX are trying to offer on a broader scale.

I believe that most printing is purchased today because of strong relationships between printers (mostly via their sales reps) and customers. These relationships are necessary to facilitate the flow of custom-manufactured product.

For printing to be bought on the Web the customer has to be willing to view it as a manufactured product, with the assumption that the product will be delivered on-time, on-budget and as-requested, without extensive human interaction.

I continue to imagine that a new breed of print buyers will team up with a new generation of print manufacturers, and take advantage of the efficiencies and cost savings that the Web affords. But compared to computer buyers and book buyers, this new breed remains a tiny minority of today's market.

The question before us is: When will it reach critical mass?

—Thad McIlroy

About the Author
Thad McIlroy is a San Francisco-based electronic publishing consultant and author, and the associate conference director of Seybold Seminars.