FULFILLMENT SERVICES -- Printers Getting Their Fill

BY MARK SMITH

Technology Editor

Nothing breeds imitation like success, but it is possible for there to be too much of a good thing. And, timing really is everything.

Enough with the clichés. Such sayings suffer from overuse, though, because their wisdom resonates with people.

So what does that have to do with fulfillment? For some years now, "industry experts" have been advising printers of the need to diversify and offer value-added services in order to thrive. Given the number of companies that now proclaim they offer mailing and fulfillment, expanding into these services would seem to be the one true industry success story.

There is a danger that pointing to mailing and fulfillment as a business opportunity can itself become a cliché. By its "2002-2003 State of the Industry Report," the National Association for Printing Leadership (NAPL) was already reporting that 58.6 percent of survey respondents offered fulfillment services and 52.2 percent did mailing. The numbers jumped to 70.7 percent and 63.9 percent, respectively, when respondents were asked how many planned to be offering those services in 2004.

Still, widespread expansion into these services hasn't seemed to diminish assessments of their business potential. According to its current industry report, fulfillment was cited by the largest percentage (59.6 percent) of NAPL survey respondents as being one of the fastest growing "diversification" markets over the next two years, notes Andrew Paparozzi, chief economist. Mailing was cited by 47.7 percent as expected to be among the fastest growing markets.

Fulfillment and mailing services tend to go hand in hand, but also represent distinct services. Printers often start out offering one and then see a need or opportunity to add the other.

Those interested in more detailed information about the market for fulfillment services, specifically, should consider taking a look at the special section in the "2003-2004 NAPL State of the Industry Report" or the just published "NAPL Survey of Fulfillment Practices Report." The reports provide data such as the types of fulfillment services offered, average number of orders per week, amount of plant space devoted to the operation, and more. They also qualitatively explore the advantages and disadvantages of this diversification strategy.

Interest Is Growing

While NAPL has taken steps to make its survey sample representative of the industry and not just its membership, the argument sometime is made that association members tend to be industry leaders. The findings of a broader industry survey conducted last year by the TrendWatch Graphic Arts research firm seems to give some credence to that notion. It found that only 24 percent of printers saw "broadening fulfillment, shipping and mailing services" as a business opportunity in the next 12 months. However, the firm also noted that percentage was up sharply compared to past surveys.

The investment barrier to getting into fulfillment services is relatively low, even if it does take more than clearing out some space and throwing up a few shelves. This can make it tempting to adopt the "build it, and they will come" business model. Nevertheless, there is a learning curve and challenges to be overcome in building a successful fulfillment operation, so the first step should be to identify a volume of potential business that justifies the effort.

Printers often are lead into fulfillment work by the needs of a current customer. One of the classic reasons is getting caught between the client and an independent fulfillment house when there were problems with product delivery.

Particularly in the case of digital printing, a client may demand that all work be done in-house because the material contains sensitive information. Also, handling variable data printing jobs entirely in-house facilitates the process control required to validate that the right pieces were delivered to the correct people.

Kennickell Print and Communications, in Savannah, GA, discovered outsourcing wasn't an option for a completely different reason when one of its clients expressed a need for fulfillment services. "There weren't any fulfillment houses in our local market," reports Al Kennickell, president.

The mid-size sheetfed printer formally got into the business about two years ago, but its fulfillment operation didn't become profitable until this year, Kennickell reports. "You need to find the right people to make the business a success," he says. "They need to be detail-oriented."

In addition, the traditional print selling strategy must be modified to address this market, the company exec asserts. "You need to start at the right point in the food chain. That means dealing with people who have budgetary responsibility," he advises.

As president of a small commercial printing operation, Sun Printing House in Philadelphia, Cynthia Wollman says she found offering fulfillment services appealing because the work is not as hit-and-miss as printing. It is often done under contract.

Extra Security Added

Sun Printing is typically selling against clients doing fulfillment work in-house, Wollman says, which means doing what it takes to provide cost-effective solutions to their headaches. As an example, she points out that the company had to turn part of its plant into a caged area in order to provide the security required to handle fulfillment of a client's sample promotions for over-the-counter medications.

Even though it's not dealing with prescription drugs, the shop has to be very diligent in its inventory management, the printing exec adds. This includes monitoring expiration dates and seeing to the return or proper disposal of unused samples.

Security is just one of the issues companies face if they look beyond fulfillment of printed materials to handling products, especially consumer goods. Working out responsibilities for dealing with returned merchandise is a must. A Web-based inventory management system is a plus for any fulfillment operations, but online order placement/tracking capabilities are the standard in direct merchandising. Establishing a separate company—or at least a brand identity—not associated with the printing operation may help with the selling proposition.

Something as basic as packaging even can become an issue when handling products. Appropriate materials (such as boxes, bubble wrap, etc.) must be inventoried, which gets complicated if customers want to extend their brand identity to packaging.

For a significant portion of its business, Rochester, NY-based ColorCentric Corp. provides outsourced production of vanity books and rare/out-of-print titles for publishers. The intent is for buyers to feel as though they are dealing with just one company—the book publisher.

Integrating the shop's ordering system into a publisher's Website to maintain a brand identity is a simple proposition. Using branded packaging materials wouldn't be, so ColorCentric has taken a simpler approach to keep costs down and speed delivery, says John Lacagnina, president and CEO.

Generic materials are used to package the book, but the packing slip tucked inside and the label applied to the outside are custom-designed for individual clients, Lacagnina explains. "The books are produced on a digital color press, so these materials can be printed as part of the job," he notes.

Variations of this digital printing production model are sometimes referred to as "electronic fulfillment." Instead of manually picking and packing prepared materials, required elements are assembled electronically and then output as a set on-demand, ready for delivery. It is promoted as a more efficient alternative to literature fulfillment.

Since fulfillment tends to be a manual operation, labor management is one of the biggest business challenges, particularly since volumes can fluctuate seasonally or even within a month. That means relying on temporary labor.

Metzgers Printing & Mailing, of Holland, OH, has developed an interesting solution, which it calls the "Mom Squad," reveals Joe Metzger, president. Relying on personal recommendations, the company has recruited a dependable pool of stay-at-home mothers interested in part-time work.

Just one more example of how fulfilling needs is the name of the game.