PS: The U.S. recession is over, and optimism reigned at DMIA's Print Solutions 2003 Conference & Expo in Las Vegas. Are you optimistic about the industry's growth potential in 2004?
Sarkans: Absolutely. Distributors are doing a great job in getting closer to end users, and manufacturers and suppliers are adding services such as fulfillment. The traditional forms industry is evolving into something else--printed business communications is an appropriate outlook--and this transition presents a great challenge for trade manufacturers that are bound to their iron. Distributors are at an advantage because they're more flexible. It will be interesting to see how more companies take advantage of digital printing and 1:1 marketing. I think we'll see a boost in the digital printing and direct mail markets. One concern about the overall health of the printing industry is there's a tremendous assault on print and paper documents. To understand the meaning of this assault, you have to view print as a display technology. Software companies such as Microsoft are creating means to display information in ways other than print. You could call electronic forms the termite of the forms industry--they're invisible, quiet and are gradually chewing away at the core of what was the traditional forms industry.
Short: We're seeing an increasing demand for equipment. I think the turnaround is going to last. What we see at the same time is a decline in the number of players in some areas of the document market. This is making strategic thinking a requirement. We don't believe we benefit from more people doing things in the same old manner. If anyone can buy any piece of equipment and produce any type of product and have a market for it, that doesn't fit our strengths because we fit into the high end of the marketplace. We think the industry is getting healthier and stronger.
Dust: Yes and no. We're excited and committed to a new business development strategy we've had for the last year and a half, and we're seeing fairly substantial growth, so that's good. The "no" part of my answer is rooted in the fact that we haven't seen business spending increase much, especially for marketing materials. As a print provider today, if you depend on your existing client base, you're not going to expand. What happened to many of us during the last few years is we increased our business through new products and services, then the sluggish economy hit and Corporate America pulled back spending. If you didn't have a new-business-acquisition campaign going, you felt some pain. We're growing our business because we're out in front of new customers.
New products are important, but more companies are preaching the value of services. How has that trend affected the way you approach customers?
Short: In the document market today, there's no more room for people in our area to merely supply a product out of a box. That was the case once, but we're way beyond that today. We're adding services that are geared toward managing equipment and thinking strategically. Suppliers are trying to provide tools to help customers get the most out of their equipment. It's no longer just about the tool or the asset--it's about information management.
Dust: Customers don't want to deal with multiple vendors if they don't have to. If they can consolidate their vendor lists and get good pricing and service, they're going to do that. That's driving more companies to offer services. We're committed to the trend that a larger percentage of our revenues is going to come from services in the long haul. Fortunately, we've maintained the traditional side and have even grown our forms business, but service areas are starting to evolve and account for a larger percentage of our business. The ones that come to mind first are graphic services, mailing and inventory fulfillment.
PS: In an industry rooted in printing and documents, many fast-growing companies now provide internet ordering and other e-commerce solutions. How is your company approaching that technology, and what have you learned from your efforts?
Mason: I'm a big believer that e-commerce technology is going to be a main driver of growth for distributors. At Webb/Mason, if we're going to continue to beat the majors for accounts, we need to offer a continually evolving, strong online ordering system. We believe our e-commerce offerings and our sales force are the greatest factors in our success. EPM Online is something we continue to invest in heavily. We have six Java programmers, and we add new-release functionality to the system every 90 to 120 days. One key move we made was building this technology in house. This helps us make promises to customers, then deliver them immediately instead of waiting six months. If we had bought something off the shelf, I don't feel like we would have gained nearly as many deals. Most of the ones we're going after involve print fulfillment contracts in which the client does an in-depth analysis of our online ordering system. One thing we've learned is the need for excellent IT people. Our chief information officer, Brian Fritsche, is brilliant. And you can offer the greatest software in the world, but if you don't have a team of salespeople who can articulate its benefits, the software doesn't matter much.
Dust: Four years ago, we jumped into e-business by offering what we call "print e-commerce" to large corporate clients. We looked at third-party application service providers and chose Collabria (since purchased by Solana Beach, Calif.-based Printable Technologies Inc.). We have a great relationship there, and also work with a good e-business solution called Quantum Net (offered by Reno, Nev.-based Forms Management Data Systems). We're doing everything from simple cataloging to digital asset management. The challenge a few years back for most companies was determining who to partner with, because it was obvious that most providers weren't going to make it. We have a great relationship with Printable and speak to the company almost daily. Something that's important to consider when choosing a third-party firm is its emphasis on production and creation, not just procurement. With Printable, we can take printed products from the internet, pre-template them, design them and impose them so they're ready to go direct to plate. We've learned that the back-end side is what makes printers more productive with e-commerce.
Sarkans: I think we're seeing only the very early stages of e-commerce. Long term, it might cause the need for fewer sales reps, as most repeat orders will be done online. The sales reps who remain will be much more skilled technologically and much more versed in program selling and development. Already, there's a shift away from an order-by-order sales mentality and toward a program-selling mentality. E-commerce fits well into that mentality. Something else we might see is manufacturers setting up virtual distributorships by using e-commerce.
