Will the Vista Print model work for Label Converters?

Posted on by Dave Erlandson | 4 Comments »

As more and more brand owners become aware of the benefits of digital printing combined with the advances in digital printing technology the industry will continue to shift to more short-run digital printing.

Label converters who wish to take advantage of this market shift are faced with key challenges in both Sales and Production.  The challenges arise due to the fact that run lengths shorter and the corresponding average order size is less, often much less. 

Today, converters operate by selling long runs on their flexo presses.  Commissions on long runs provide ample sales incentive and the cost of order processing is a small percentage of the total. But, when the order size decreases sales commissions per order go down, thereby reducing the amount of money a sales person can make per order.  At the same time the cost of preparing a short run order is typically very nearly the same as for a long run, thus the costs of ordering and prepress go up as a percentage of the total revenue.  So if a business starts doing a high number of short run jobs, without making any process changes; the sale personnel are going to have to work harder to stay at the same compensation level and the costs of preparing jobs will rise as a percentage of revenue.

This issue is not unique to label converters.  Commercial printers have been struggling with same issue for several years now.   Solutions include hiring new sales personnel for digital printing sales, restructuring sales compensation plans, creating private web to print portals for customers, or even replacing the sales force with a web to print portal on the internet to drive orders.  These solutions are now being tried in the label converting market as well.

The leader in the internet sales model for the label industry is Steve Smith. Steve Smith was President and Co-Owner of Lightning Labels until its acquisition in 2008 by Cenveo. Lightning Labels is a Denver-based label converter and was the first all-digital and internet-focused operation in the industry. In May of 2013 after a short stint in consulting Steve is back at it again. He is now CEO of Wizard Labels, a new internet-based label converting company.

The leader in online sales in the commercial printing industry is Vista Print. Their success has been widely discussed. Can this same model work in the label industry? Steve notes there are key differences in web to print systems for the label industry versus the commercial industry.  The main difference is that ordering a label for the first time is a much more complex task than ordering a brochure or a business card and thus there are limits as to how far an online system can take an order without undue risk of getting the order wrong.

A custom label order is a very complicated task. It typically consists of receiving multiple pieces of artwork (often not print ready), and requires the specification of a large number of items that a converter needs to know in order to actually start a job (substrate, die size, color strategy, varnish/lamination options, finishing, roll sizes, unwind direction, etc.). For some straightforward label orders this could all be done online, but normally there is too much risk to proceed without human intervention.

Steve built the very first online label-quoting program – one that we didn’t require prospects to identify themselves and they allow a prospect to “place an order online” if they were comfortable with the price quoted. But they never asked for credit card details online and never started a production job without verifying everything with the customer first.

So there are limits as to how far the web to print system can go on-line for first time orders, but for re-orders an online portal is a “no-brainer”.  Customers prefer an on-line system for re-ordering.  And re-orders comprise the vast majority of orders.

Steve’s model is similar to the Vista Print model. Steve has no sale personnel in his company, just well-trained and highly experienced customer service representatives that help customers with first time orders.  But that doesn’t mean he doesn’t have other sales expenses.  Steve will spend significant dollars with Google and other online search firms to make sure his company name comes up on the first page when you go online to find a supplier.  This is an ongoing challenge and requires extensive expertise as well.

Working out the sales model is one of the top issues to master as you go after more short-run business. As we have seen in the Commercial market there are a number of options that can work. Whatever option you choose it’s critical to have your entire team aligned otherwise your company will not perform optimally.

4 Responses to “Will the Vista Print model work for Label Converters?”

Comment from Leonard Stern
Time November 8, 2013 at 6:47 pm

The model will work it just takes time & money to develop it. Purchasing on line in the print industry and working at internet speeds not commercial speeds is what all printers want. It just takes someone to develop the right programs in place to make it happen than it takes someone to drive the right traffic to the website. Then you have a licence to print money!

Comment from Mark Thompson
Time November 11, 2013 at 12:27 pm

The core assumptions in this article about VistaPrint.com, DiscountLabel.com and online label quoting are not supportable.
The assumption that VistaPrint is in the same market as Lightning Label, is erroneous. While the companies’ clearly have some minimal market segment overlap, VistaPrint markets to a much different client than does Lightning Label. VistaPrints’ target market is small office home office customers. Lightning Label sells to small, mid-market and Fortune 1000 business customers.

You an prove this to yourself by simply look at the site functionalities, quantity, pricing and features of the two companies’ label offerings. It’s clear that they target vastly different audiences with vastly different label needs. Vistaprint has much lower minimums, fewer options and ofes a design online solution for customers without artwork. Lighting Label has higher minimums, more options and only offers custom artwork uploads – they have no online design solution because their customers, for the most part, do not need one. While VisatPrint, woefully, serves very short run label buyers, Lightning Label serves more sophisticated, larger customers with correspondingly more aggressive price demands.
As to online quoting, Lightning Label was not the first, the second nor the third online label player to offer instant online pricing. MaverickLabel.com launched and owns patents on online label quoting that predate the existence of Lightning Label. Lightning Label’s quoters are neither sophisticated nor particularly difficult to replicate – many dozens of sites have done so with their own unique variations. Most simple labels can be quoted with quoters that might take a week to build, or less, if you have the experience and the team to do so.
MaverickLabel.com has the most difficult to emulate label quoters there are, in the world. They built them to feed not just one type of label equipment (as Lightning and many others have) but all types. Within their model, it’s about meeting customer needs not equipment to feed. They have quoters for Digital, Flexo, Stamping, Embossing and more, including blanks. They match the right equipment to the customers’ needs, making quoting easy.
Articles, such as this one, while well intentioned, point out the general lack of understanding about retail print commerce within the overall industry. Vistaprint has no meaningful competitors, online. Lightning Label has hundreds, with varying degrees of sophistication in site functionalities and the label products customers can order: ranging from simple like Lightning Labels to very complex like MaverickLabel.com

Comment from Dave Erlandson
Time November 13, 2013 at 2:42 pm

Mark, thank you for the thoughtful comment. Steve Smith was saying he thinks he can only take the internet ordering model so far for labels and then a CSR needs to get involved. I see the MaverickLabel.com site goes further online with the order. It appears that MaverickLabel.com is able to process new orders without a conversation with the customer? Is that right? If so that should be a winning model for selling short run jobs.

Comment from Mark Thompson
Time November 13, 2013 at 3:17 pm

Dave, thanks for your reply. You are correct, MaverickLabel.com is able to process new and repeat orders and repeat orders with changes without CSR intervention. This includes the ability to provie proofing on any custom order, new or repeat. In fact, most orders for MaverickLabel.com do not involve CSRs in any way. Though they do have a very experienced CSR staff.

Providing instant online pricing that reflects all of the on-demand printing and finishing attributes that meet customer expectations, retaining the attributes and artwork for orders placed online and enabling re-orders requires a significant investment. MaverickLabel.com is, in our experience, one of the few online label companies that has sourced and invested in the right combination of label product experts and IT professionals to create a winning approach that works error free, every time, for every type of customer and order, for the widest array of short run label and finishing options.

The tougher challenge for a company interested in selling short run labels online (or any short run printed products) is to be found, organically, by search engines. MaverickLabel.com, and others, will tell you that the investment in a winning approach to selling POD on-line, only has meaningful ROI if your site is found. These companies invest heavily in evergreen commitments to Search Optimization and Marketing to ensure that their sites are found through the most effective and affordable strategies possible.

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