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Business-to-Business Dot-Coms, Once Hot, Are Next Area of Worry - By Lee Gomes Staff Reporter of The Wall Street Journal E-Commerce for Printers: Change, Realities, & Impacts - Terry A. Nagi, President & CEO of Terry A. Nagi & Associates & DigitalPrint Resources CREO & PROGRAPH create printcafe - A Revolutionary new e-commerce solution for the printing and publishing industries. R.R. Donnelley and Noosh Form Strategic Marketing and Development Alliance- Leading Commercial Printer Invests $14 Million in noosh.com Quick Comparison Chart. PIA asked Noosh, Collabria, Impresse, MediaFlex, and PrintNation to answer numerous questions. The comparison guide is a dynamic guide also. ECommerce Thoughts - By Robert Lindgren, PIASC Trendwatch Design & Production 2005
Business-to-Business Dot-Coms, Once Hot, Are Next Area of Worry - By Lee Gomes Staff Reporter of The Wall Street Joural Will the overheated market for "business-to-business" online companies be the scene of the next big Internet shakeout_ Consider a company called Noosh Inc. Noosh's business plan calls for it to link businesses that need something printed, like brochures or reports, with companies that will put ink to paper. The ink Noosh itself is producing is red -- par for the course in the Internet world. But Noosh has taken the New Economy business model one step further: When it filed to go public in January, Noosh said that it not only lacks profits, it also lacks sales. During its entire operating history -- six months -- Noosh has given away its service to its intended customers, the print buyers inside big companies. It hopes to convert them to paying users this year. Though Noosh is in its "quiet period," and can't publicly comment, its IPO filing cites its early entry into its market as an advantage. The market is awash with Noosh-like startups all vying for a slice of the "B-to-B" market for printing. Impresse Inc. which is also hoping to go public soon, had revenue of $4,000 last year. Two printing-oriented dot-coms that are already publicly traded, ImageX.com Inc. and Iprint.com Inc., had $15 million in 1999 sales -- most either from deeply discounted products or from traditional off-line printing work. And venture capitalists have funded 37 different printing-oriented business-to-business companies, putting as much as $75 million into some, says James Harvey, vice president of the Graphic Communications Association, a trade group. In other words, the boom in Web-printing start-ups is creating exactly the same oversupply that sparked a rash of online retail failures in the "business-to-consumer" world. Printing stocks are already getting hit: Shares in ImageX and Iprint have both fallen sharply in recent weeks. And the pattern is being repeated in industry after industry, with hundreds of business-to-business start-ups vying with often-dubious prospects. It wasn't supposed to be this way. If the business-to-consumer world was all about an overpopulation of overvalued companies marketing trivial ephemera -- Beanie Babies on eBay, for example -- business-to-business was supposed to be more stolid, serious and, well, business-like. Boosters said the potential markets were huge -- billions of dollars a year in printing alone -- and resulting savings from Internet technology could be massive. But some investors are beginning to conclude that electronic
retailers and other business-to-consumer companies have no monopoly
on wishful thinking. Not only are shares in smaller business-to-business
outfits like ImageX and Iprint declining, but so are those for
what may be the arena's blue-chip startups, like Ariba Inc. and
Commerce One Inc. Stocks of both of those general-software service
providers have fallen roughly 50% in the last month, though Ariba
gained some of that back this week. Thursday, Ariba rose Already, some companies in the business-to-business field are either canceling or scaling back plans to issue stock. Last week, for example, Ventro Corp., which operates in the chemicals industry, cited market conditions in nixing a stock offering. Instead, the company sold convertible notes, and fewer of them than it initially planned. None of the printing companies about to go public have yet made the same move. Most, like Noosh, are in their quiet period and can't publicly discuss in detail what's in store. But some concede these are white-knuckled times. "We are watching how everything is going very closely," says a spokeswoman for PrintCafe Inc. A Pittsburgh company whose public offering is expected in the next few months. With dozens of companies trying to elbow into the printing market, even industry participants expect a shakeout. "Like in any new market, there are going to be acquisitions and mergers in printing," says Brigitte Heiser, spokeswoman for Collabria, Inc. yet another printing start-up. "The market can't sustain this many companies. It's crazy." Most of these online printing start-ups don't do any printing themselves. Instead, they are using the classic business-to-business game plan. They act as intermediaries, using the Internet to connect printers with people who need something printed -- typically companies that need corporate marketing materials printed up. The start-ups usually say they will make money on things such as transaction fees, ad revenue and auction charges. That venture capitalists and entrepreneurs would be drawn to the printing market in the first place might seem odd. The business is mature and slow-growing, with sales increasing by just a few percentage points a year. Cheap, high-quality PC-based printers are everywhere, and traditional walk-in printing operations like Kinko's Inc. are proceeding apace with ambitious online plans of their own. What's more, established printing companies aren't exactly Wall Street darlings now. For example, shares in R.R. Donnelley & Sons Co., the world's biggest printer, are at 18-month lows. Ironically, the reason is the Internet itself, says Douglas M. Arthur, an analyst with Morgan Stanley Dean Witter. With more people shopping and doing other sorts of business online, he says, some investors are concerned that consumers won't need nearly as much printed material as they once did. The online printing start-ups, as well as some analysts, say the Internet can transform an industry that has long been fragmented, full of small, independent, low-margin operators. "Right now, printing is a smokestack industry, but it has got to enter the Internet age," says Frank Romano, who follows the industry at the Rochester Institute of Technology. "Someone is going to get rich making that happen." Though a shakeout among printing start-ups is widely expected, each company itself says it has something that sets it apart -- even though some of their ideas have been tried before, by the likes of Donnelley. For example, Mark Porter, president of Httprint Inc. a San Francisco company, plans to give his online customers who want it immediate access to live human experts who can answer questions about the often-complicated printing process. And Mimeo.com Inc. is one of the few printing start-ups that plans on doing any printing itself. The company has a facility in Memphis, Tenn., near the huge operations of FedEx Corp. E-mail Mimeo.com something to print by 10 p.m., and it will be sent to you by overnight delivery the next day. Mimeo.com's Chief Executive Jeff Stewart says one group of people has already become avid users of the service: start-up entrepreneurs eager to get their business plans printed up.
Like it or not, e-Commerce for printers, introduced only in the past few months, will have significant and long range impacts on printers large and small. Assuming the next few years will "be business as usual" will be dangerous. All printers should have an e-Commerce strategy, even if it means sticking to business as usual. This strategy includes: 1. Surveying the top 20% of clients who provide 80% of most
printers' business, to determine their initiatives in using the
Internet and the Computer to purchase products and services,
including print. e-Commerce Realities Reality #1 - e-Commerce can save time and people. Reoccurring transactions, estimate write up, job ticket write up, inventory checking, e-mail vs. voicemail correspondence, all initiated by the client, ultimately saves time and people costs. More importantly, everyone involved in a print order has instant access to the latest information on that order, practically eliminating questions regarding what's the latest instructions, version, changes, and where is that information located. One of the greatest features of e-Commerce is that it keeps everyone on the same page with the same information, updated instantaneously to all. Reality #2 - The time saved by the printer's customer contact people, formerly spent placing down information, can now be reassigned to watching over more critical orders and clients. Reallocation of how customer service representatives use their time will become a more critical factor. There may not be fewer customer service representatives per million of sales of a printer, but their focus will be on being a very strong reason why key accounts are more loyal to their printer. e-Commerce will accelerate the trend of making the customer service representative the primary contact for a contact from order entry to the job delivered to the customer's door. Reality #3 - The role of the sales representative will change from writing up requests for estimates and job orders, plus following them through the plant to new account development and critical account "Solutions Selling". Instead of tracking down information on where an order is in the plant and what latest changes have occurred. The sales representative will spend more of their time on-the-road. Instant access to information from laptops and palmtops will keep them informed of what's happening with clients and jobs, as conveniently in their cars as in their office. Sales people will have additional time to study the client's business, how the client's clients react to print, and provide value-added solutions to making print more productive and effective. In the end, there will be a lessor number of sales representatives per million dollar of sales. Those left will be more valuable as finding new accounts is a critical process for the success of any printer in the future. Reality #4 - Compensation practices in the printing industry will change, especially for the entire customer contact team. Sales representatives now on commission will slowly move towards salary plus smaller commissions on continuing accounts, with significant bonuses for new accounts. Customer service representatives now normally on straight salary will be paid a salary plus incentive as they become more responsible for current client maintenance and retention. The overall cost of sales people and customer service representatives as a percentage of total sales will decrease. Reality #5 - Early adopters of e-Commerce solutions for their clients (and future prospects) will have a new marketing tool (useful for one year or more) to new clients (and current clients) seeking to computerize their purchasing process via the Internet. Sales people will be selling transaction efficiency versus quality of print. Reality #6 - e-Commerce systems will blend well with printers who offer warehousing/ fulfillment/mailing/dealer programs, where clients are already familiar with on-line order entry, release of goods, inventory checking, e-mail communications, and other Internet transaction based processes. Reality #7 - Logic, Hagan, PSI and other printer software packages are working closely with e-Commerce software vendors to integrate the systems. Ultimately, this means availability of whatever information you wish to make available, password protected, behind firewalls, to both internal employees and clients. Reality #8 - Printers capable of efficiently handling PDF file transfers and are successful in training clients how to build best files will find significant benefits over competitors next less capable in this, in their e-Commerce solutions. Saving time on transmitting estimates, orders and changes, plus communications on an order will simply be less effective in e-Commerce if workflow issues are not solved. Reality #9 - Print vendor reduction will continue by print buyers. Corporate management will simply insist that a select few printers serve the diversity of their print needs, to simply save time and money. e-Commerce transactions will simply permeate these types of buyers. Reality #10 - e-Commerce transactions with suppliers (paper, ink, designers, Web site developers, finishers, etc.) will reduce the administrative costs to the printer as well as speed timely information. The same benefits that are accruing to the print buyer are now accruing to the printer in dealing with its vendors. Reality #11 - Human-to-human (customer to sales representative or customer service representative) conversations will be significantly reduced. A plan of action must therefore be initiated by the printer to make e-Commerce (e-mail) transactions more personable. Special events will have to be planned to bring customers and the people of the printer together. Entertainment budgets will have to be increased. Plant tours will have to become more important. In-person presentation of new ideas must be heightened. The impersonalization of the Internet must be overcome by the personalization of the company. Reality #12 - Client profiling will become more important. From databased information collected by sales, customer service, executives, etc., transactions, be they e-mail, voicemail, telephone, or in-person should include "friendly" information which fits the client being contacted. The success of Customer Relations Management (CRM) software confirms the necessity of understanding and databasing individual client characteristics. Reality #13 - e-Commerce costs money. Most providers of e-Commerce solutions charge a transaction fee. A printer's e-Commerce strategy must find a way to absorb these fees by reducing the traditional cost of selling, customer service, estimating, administrating a client's business, etc. Strategizing a change in a printer's organization will be essential. Without it, e-Commerce could bankrupt a significant number of printers. The Last Reality - If you think you can avoid e-Commerce, you most likely can't. Many printers thought desktop publishing and electronic file creation by clients was a non-reality in 1992. There is hardly a printer today that does not have a significant desktop operation. Of course, not every print buyer will be into e-Commerce transactions with their printer in the next year. Some major Fortune 500 companies will be. It will trickle down to the medium and even small sized organizations. The retail business has embraced e-Commerce transactions in less than 2 years. It is forecast that business-to-business e-Commerce will be 10 times the value of retail e-Commerce transactions by the year 2005. Whether printers like it, want it, understand it or believe in it, the time is now for all printers to begin strategizing how they will react to this impending major influence on the printing business. Terry A. Nagi is President of DigitalPrint Resource, a
sales and marketing consultancy dealing with the realities of
print today, and a printer's transformation in the ever-changing
world of electronics and digital communications. ECommerce Thoughts
- By Robert Lindgren, PIASC Of course, both kinds of systems have common elements but their primary emphasis is very different. Our natural reaction is one of concern (perhaps, horror) at procurement-centric models since they seem to commoditize printing and they ignore the very real values that printers can bring to projects that are in fact ill-defined by the client and which are being designed and redesigned while they are being built on overnight timetables. However, reading the words of one of the sellers of a relationship-centric system which called "for printers to take a stand on how ecommerce should work for us" left us concerned about the apparent failure to realize that the decision maker on this question was the client and not the printer. If your clients decide that they want to use a procurement-centric system to buy from the lowest bidder, you have no choice but to play their game or get another ballpark. Of course, this result may demonstrate a failure on your part to persuade the client that there is real value added in your work which justifies the price (or it may be that the work in question was a commodity after all) but, in any case, it's the client's decision that counts. This is very much an evolving area in which you owe it to yourself to know as much as possible about the systems and approaches that are out there. CREO & PROGRAPH CREATE PRINTCAFE R.R. DONNELLEY AND NOOSH FORM STRATEGIC MARKETING AND DEVELOPMENT
ALLIANCE: COLLABRIA SECURES FUNDING IN EXCESS OF $46 MILLION NEW TRENDWATCH REPORT PREDICTS THE FUTURE OF CREATIVE BUSINESSES AND THEIR TECHNOLOGY THROUGH 2005
TRENDWATCH DESIGN & PRODUCTION 2005 HARRISVILLE, RI -- February 1, 2000 -- In the new report just released, Design and Production 2005, TrendWatch predicts how the business of creating and producing creative ideas will change between now and 2005. TrendWatch Design and Production 2005 is available now through TrendWatch. "We all know how quickly creative shops have adopted digital technologies," said Jim Whittington, TrendWatch Partner. "One of the issues owners now face is re-inventing their business models to address the increasing demands by their clients for electronic and on-demand services. While this may sound simple on the surface, it is keeping many owners awake at night as they try to recapture and bill for time their designers spend sending emails and making PDF files for proofs." According to TrendWatch Design and Production 2005, creative businesses of all sizes will need to solve the following problems:
"Although there are some interesting challenges to solve, this business will be further defined by the continued evolution of the Internet and creative shops' understanding of how use and integrate its power to produce bottom-line results," noted Whittington. "Our research shows that well over half of the traditional print-focused creative shops are now doing Web design and production jobs for their clients who increasingly want all of their outbound media to be strategically integrated, coordinated, and highly targeted." "This puts tremendous added pressure on designers who now must design in 8-D to fully consider their clients' media requirements," said TrendWatch Partner, Dr. Webb. He further states, "Designers now need to think about how their designs will be used across all media, not just print. Understanding website architecture is a big piece of this puzzle as designs must work as drill-downs, links, and streaming media are become expected and must work on a 17-inch computer monitor with standard browser elements and colors." In the section titled "Myths and Truths," there is a lively discussion focused on how misconceptions about the creative business and markets are believed and how many truths are not fully understood. Also in this section is valuable information about color proofing, stock images, desktop publishing software, and how workflow is changing. In another section, "Design and Production After the Millennium," TrendWatch covers the many changes creative shops will experience in the areas of initial design, employee skills, communication with clients, justifying how time is billed, how shops make money, tapping into "direct to" workflows, digital jobs, and the influence of the Web. Who will benefit from this report...
Whether a shop owner, vendor or analyst, Design and Production 2005 delivers a solid view of what's next in this business. It discusses both problems and opportunities presented by the increasingly fast pace of the creative business. And the TrendWatch perspective is based on facts collected from owners and executives of creative businesses. Availability and Cost of Complete Report... TrendWatch Design and Production 2005 is available now and will include these and other discussions for 2005. The price of Design and Production 2005 is $1250. Special prices are available for current TrendWatch Report Subscribers. |