Rock LaManna01.26.15
What’s the multi-billion dollar market that some savvy label printing companies are cashing in on? Trade-only label printing. But while there is certainly money to be made, it’s not without a huge amount of commitment and forward thinking.
Trade printers’ value revolves around the benefit of choice. If customers works directly with a manufacturer, they can only select products offered by that manufacturer. Thus, product availability often determines a customer’s decision more than quality.
Distributors offer customers a more attractive alternative. Their relationship with multiple manufacturers paired with their industry knowledge helps them provide customers with the perfect solution for their specific needs.
That means if you’re a trade printer who can consistently show distributors your business will produce quality labels, they’ll come back to you time and time again.
Consider the merits of the trade-only approach. Let’s tap into the knowledge base of several business owners who’ve already succeeded to give you a more realistic idea of what the market is all about.
Four Crucial Traits to Become a Successful Trade-Only Printer
1. Establish relationships with distributors - Few factors influence a trade-only printer’s success like the quality of their relationship with distributors. It’s a symbiosis that takes trust and commitment from both ends.
Trade printer Diversified Labeling Solutions (DLS), based in Itasca, Illinois, is one of the leaders in this front. The company fully embraces the importance of forging a relationship with distributors and goes to great lengths to nourish it. “We don’t consider our distributors to be customers, we think of them as our business partners,” CEO Jim Kersten says. “We listen to their needs and work with them to make the investments necessary to meet them.”
That commitment to meeting distributors’ needs is evident in DLS’s wide assortment of printing equipment. The company now owns more than 40 presses, including digital presses, in order to remain relevant in the multi-faceted label industry.
Furthermore, as DLS has evolved, so has its relationships with distributors. For instance, DLS now houses its own market research staff, which it uses to identify emerging industry trends – knowledge the company can in turn share with its distributors.
“It’s a nice mix of listening to distributors and identifying things on our own,” Kersten says. “We can identify emerging trends to help distributors explore new products and services, while their research does the same for us.”
2. Seek opportunity - The most profitable trade printers are often also the ones whose businesses are born from identifying an opportunity. This was the case for Bob Castle, the owner of Largo, Florida-based Brightfish Label. When Castle started his company in 2008, it operated as a digital-only printer that sold direct. Unfortunately, business didn’t boom the way he had hoped. The small-scale digital work couldn’t offset the high involvement of selling direct.
What did Castle do? Rather than hoping things would eventually turn around, he found an opportunity. Knowing that other conventional printers were struggling to capitalize on digital opportunities – which are more cost effective for smaller runs – Castle decided to switch his target. Instead of selling direct, he began selling digitally printed labels to conventional printers.
“A conventional printer may not want to go after that smaller-run work because it’s not as cost effective for them,” he says. “They’re better suited to focus on longer runs each day rather than getting bogged down by smaller orders.”
With the new model in place, things suddenly changed for conventional printers. Finally, they had a place to turn if a customer requested a small order.
Why is accepting smaller runs so important for conventional printers? Even if a newer client is interested in placing a large order, they’ll typically start by requesting a smaller order to establish trust. Should things go smoothly, they often place a larger order later on.
Brightfish Label provided that much-needed opportunity for conventional printers to get their foot in the door with these smaller orders.
3. Adapt to new technology - Printing technology is constantly evolving - a fact that can both benefit and worry trade printing business owners. Consider Brightfish Label, for example. Most conventional printers can’t invest in the digital printing technology that Brightfish Label uses because it’s expensive and requires constant reinvestment as new technology becomes available.
“It’s why our business model makes a lot of sense for conventional printers,” Castle says. “By us taking on the expenses required for these investments, they don’t need to take on these costs on their own.”
However, this also places a lot of pressure on Castle’s business. For instance, what happens if a manufacturer releases new technology before Brightfish Label has the capital to invest? “That’s what keeps me up at night,” he says.
Of course, Brightfish does keep a reserve fund for reinvestment, but balancing cash flow with reserves remains a challenge.
While DLS’s business model is vastly different from Brightfish Label’s, it too depends on adaptability to remain relevant. In order to attract the widest range of business from distributors, the company must have a vast array of printing and converting capabilities.
To direct its investments, DLS again turns to its partnerships with distributors, who work to stay on the cutting edge of advancements in order to remain a value-added resource for their end user customers.
“We encourage our distributors to challenge us to say ‘yes’ to their needs,” Kersten says. “That’s how we become a better company.”
4. Remain cost-efficient - In order to keep costs affordable for customers while maintaining the necessary capital for reinvesting in new technology, trade printers must be careful with spending. That’s why many trade printers adopt a very lean business model.
DLS, for example, doesn’t have a salesforce. Instead, the company depends on its executive team, advertising, trade shows, word of mouth and industry meetings to reach its distributor base. Another rather unique way that DLS reduces its expenses is by operating in a shared service environment. Although the company has strategic locations across the country, it centralizes its pricing, order processing, customer service, finance and other services.
“It makes our process lean, easy to navigate and keeps our costs down,” Kersten says. “It’s a win-win for both us and our distributors.”
Brightfish Label has also developed a lean business model that features a reduced number of customer service representatives. “We don’t need to walk them through the process,” Castle says. “We can really focus on just running work as efficiently as possible and being cost effective for our customers.”
What a Reseller Looks for
Perhaps one of the most helpful ways to succeed as a trade-only label printer is understanding the qualities that make a business attractive to resellers. After all, without resellers, a trade printer’s value is effectively nil.
Fortunately, resellers often desire the same thing that trade printers want from them: commitment, quality and trust. Without dependable trade printers, resellers would have a difficult time attracting customers of their own.
Such is the case for NTI Data, a reseller in Goffston, New Hampshire who works primarily with trade-only printers to sell thermal-transfer products and labels. According to owner Tom James, his company finds products that provide the best value to its customers based on a pre-selection that evaluates for speed, service levels and quality.
However, finding quality products becomes even more important for NTI Data when you consider its primary customer base. Most of NTI Data’s clients require labels with critical or technically challenging applications that must withstand weather elements, including extreme heat, cold or frequent contact, sometimes for up to ten years.
Given the critical nature of its clients’ needs, NTI Data must have a high level of trust in its trade-only partners. Should a printer fail to provide the correct high quality products every time, NTI Data’s own reputation is at stake. “We’re only as good as our manufacturing partners,” James says. “If they don’t get us quality products in a timely manner, then it’s going to hurt. It’s also why we review our partnerships every year and ensure we provide our clients with only the best.”
The Right Strategy for Becoming a Trade-only Printer
I was honestly shocked to learn the size of the trade printing market. There is tremendous potential for profitability. However, there’s a right way of acting as a trade printer, and a wrong way.
Primarily, if you want to be a key player in the trade printing label business, you need to commit to acting solely as a trade-only printer. If you go behind your distributors’ backs and occasionally sell direct, you’re going to have a tough time ever reconciling that trust.
Additionally, as you’ve seen, several big players already exist in the trade printing market. If you’re considering expanding into the trade-market niche, I suggest buying out a smaller company. An acquisition is far more expedient than organic growth.
I’ve shown you the potential for trade printers and have provided some tips for breaking into the market. It’s a lucrative niche, but it won’t come easy. Consider these tips from the experts before you endeavor to ply your trade with the trades.
Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. Rock can be reached by email at rock@rocklamanna.com.
Trade printers’ value revolves around the benefit of choice. If customers works directly with a manufacturer, they can only select products offered by that manufacturer. Thus, product availability often determines a customer’s decision more than quality.
Distributors offer customers a more attractive alternative. Their relationship with multiple manufacturers paired with their industry knowledge helps them provide customers with the perfect solution for their specific needs.
That means if you’re a trade printer who can consistently show distributors your business will produce quality labels, they’ll come back to you time and time again.
Consider the merits of the trade-only approach. Let’s tap into the knowledge base of several business owners who’ve already succeeded to give you a more realistic idea of what the market is all about.
Four Crucial Traits to Become a Successful Trade-Only Printer
1. Establish relationships with distributors - Few factors influence a trade-only printer’s success like the quality of their relationship with distributors. It’s a symbiosis that takes trust and commitment from both ends.
Trade printer Diversified Labeling Solutions (DLS), based in Itasca, Illinois, is one of the leaders in this front. The company fully embraces the importance of forging a relationship with distributors and goes to great lengths to nourish it. “We don’t consider our distributors to be customers, we think of them as our business partners,” CEO Jim Kersten says. “We listen to their needs and work with them to make the investments necessary to meet them.”
That commitment to meeting distributors’ needs is evident in DLS’s wide assortment of printing equipment. The company now owns more than 40 presses, including digital presses, in order to remain relevant in the multi-faceted label industry.
Furthermore, as DLS has evolved, so has its relationships with distributors. For instance, DLS now houses its own market research staff, which it uses to identify emerging industry trends – knowledge the company can in turn share with its distributors.
“It’s a nice mix of listening to distributors and identifying things on our own,” Kersten says. “We can identify emerging trends to help distributors explore new products and services, while their research does the same for us.”
2. Seek opportunity - The most profitable trade printers are often also the ones whose businesses are born from identifying an opportunity. This was the case for Bob Castle, the owner of Largo, Florida-based Brightfish Label. When Castle started his company in 2008, it operated as a digital-only printer that sold direct. Unfortunately, business didn’t boom the way he had hoped. The small-scale digital work couldn’t offset the high involvement of selling direct.
What did Castle do? Rather than hoping things would eventually turn around, he found an opportunity. Knowing that other conventional printers were struggling to capitalize on digital opportunities – which are more cost effective for smaller runs – Castle decided to switch his target. Instead of selling direct, he began selling digitally printed labels to conventional printers.
“A conventional printer may not want to go after that smaller-run work because it’s not as cost effective for them,” he says. “They’re better suited to focus on longer runs each day rather than getting bogged down by smaller orders.”
With the new model in place, things suddenly changed for conventional printers. Finally, they had a place to turn if a customer requested a small order.
Why is accepting smaller runs so important for conventional printers? Even if a newer client is interested in placing a large order, they’ll typically start by requesting a smaller order to establish trust. Should things go smoothly, they often place a larger order later on.
Brightfish Label provided that much-needed opportunity for conventional printers to get their foot in the door with these smaller orders.
3. Adapt to new technology - Printing technology is constantly evolving - a fact that can both benefit and worry trade printing business owners. Consider Brightfish Label, for example. Most conventional printers can’t invest in the digital printing technology that Brightfish Label uses because it’s expensive and requires constant reinvestment as new technology becomes available.
“It’s why our business model makes a lot of sense for conventional printers,” Castle says. “By us taking on the expenses required for these investments, they don’t need to take on these costs on their own.”
However, this also places a lot of pressure on Castle’s business. For instance, what happens if a manufacturer releases new technology before Brightfish Label has the capital to invest? “That’s what keeps me up at night,” he says.
Of course, Brightfish does keep a reserve fund for reinvestment, but balancing cash flow with reserves remains a challenge.
While DLS’s business model is vastly different from Brightfish Label’s, it too depends on adaptability to remain relevant. In order to attract the widest range of business from distributors, the company must have a vast array of printing and converting capabilities.
To direct its investments, DLS again turns to its partnerships with distributors, who work to stay on the cutting edge of advancements in order to remain a value-added resource for their end user customers.
“We encourage our distributors to challenge us to say ‘yes’ to their needs,” Kersten says. “That’s how we become a better company.”
4. Remain cost-efficient - In order to keep costs affordable for customers while maintaining the necessary capital for reinvesting in new technology, trade printers must be careful with spending. That’s why many trade printers adopt a very lean business model.
DLS, for example, doesn’t have a salesforce. Instead, the company depends on its executive team, advertising, trade shows, word of mouth and industry meetings to reach its distributor base. Another rather unique way that DLS reduces its expenses is by operating in a shared service environment. Although the company has strategic locations across the country, it centralizes its pricing, order processing, customer service, finance and other services.
“It makes our process lean, easy to navigate and keeps our costs down,” Kersten says. “It’s a win-win for both us and our distributors.”
Brightfish Label has also developed a lean business model that features a reduced number of customer service representatives. “We don’t need to walk them through the process,” Castle says. “We can really focus on just running work as efficiently as possible and being cost effective for our customers.”
What a Reseller Looks for
Perhaps one of the most helpful ways to succeed as a trade-only label printer is understanding the qualities that make a business attractive to resellers. After all, without resellers, a trade printer’s value is effectively nil.
Fortunately, resellers often desire the same thing that trade printers want from them: commitment, quality and trust. Without dependable trade printers, resellers would have a difficult time attracting customers of their own.
Such is the case for NTI Data, a reseller in Goffston, New Hampshire who works primarily with trade-only printers to sell thermal-transfer products and labels. According to owner Tom James, his company finds products that provide the best value to its customers based on a pre-selection that evaluates for speed, service levels and quality.
However, finding quality products becomes even more important for NTI Data when you consider its primary customer base. Most of NTI Data’s clients require labels with critical or technically challenging applications that must withstand weather elements, including extreme heat, cold or frequent contact, sometimes for up to ten years.
Given the critical nature of its clients’ needs, NTI Data must have a high level of trust in its trade-only partners. Should a printer fail to provide the correct high quality products every time, NTI Data’s own reputation is at stake. “We’re only as good as our manufacturing partners,” James says. “If they don’t get us quality products in a timely manner, then it’s going to hurt. It’s also why we review our partnerships every year and ensure we provide our clients with only the best.”
The Right Strategy for Becoming a Trade-only Printer
I was honestly shocked to learn the size of the trade printing market. There is tremendous potential for profitability. However, there’s a right way of acting as a trade printer, and a wrong way.
Primarily, if you want to be a key player in the trade printing label business, you need to commit to acting solely as a trade-only printer. If you go behind your distributors’ backs and occasionally sell direct, you’re going to have a tough time ever reconciling that trust.
Additionally, as you’ve seen, several big players already exist in the trade printing market. If you’re considering expanding into the trade-market niche, I suggest buying out a smaller company. An acquisition is far more expedient than organic growth.
I’ve shown you the potential for trade printers and have provided some tips for breaking into the market. It’s a lucrative niche, but it won’t come easy. Consider these tips from the experts before you endeavor to ply your trade with the trades.
Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. Rock can be reached by email at rock@rocklamanna.com.