We are currently seeing times of uncertainty due to different crises created by different sources. Besides bringing new challenges, crises often also accelerate existing trends and even create some opportunities.
There is nothing new about online purchasing, print volume consolidations and inkjet, outsourcing, labor shortages, or even sustainability. What is new is the speed that these trends are picking up and, most importantly, how they will impact the market and change the ecosystem.
Online Purchasing
Having an online presence seems like a great opportunity…but for whom? It’s true that, as we enter a larger market (the Internet) to sell our products, our opportunity grows—but so does the number of competitors. The biggest challenge is not only the competition, but also figuring out who they are.
Even though not all printing products are a commodity, some can be seen as such based on the way the print service provider (PSP) sells them or the print buyer perceives them. Commodity products—ones that are good quality and provide a good service by the company that produces them—are often bought on price as the main differentiator.
Yet the challenge lies in this bigger market. We compete with very large online print corporations with economy of scale models that offer extremely low pricing. The online purchasing trend will drive other trends, such as print volume consolidation, inkjet, and even outsourcing.
| Do you think you will increase your use of online ordering to purchase printed material? |
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Print Volume Consolidation
There is nothing new about print volume consolidation as most of the print volume comes from a small number of very large PSPs (e.g., Donnelley, Quad, Taylor Group, Cimpress, Deluxe Corporation). Again, what is new is the speed of how these print volumes are shifting, helped by the internet and the economy of scale models that make the big PSPs bigger.
The current crisis of paper shortages could be accelerating this trend even further, favoring larger PSPs that can purchase the larger minimum orders that paper mills/merchants are requiring. Smaller PSPs will have more of a challenge due to paper supply chain disruptions.
Inkjet fits very well with the print volume consolidation as larger PSPs focus on inkjet to increase productivity and reduce TCOs, as they have the large volumes to justify a bigger inkjet capital investment.
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| Source: Electrophotography (EP) – Keypoint Intelligence Global Forecast |
Outsourcing
Outsourcing has always been a trend. Most printers outsource something at some point because of capacity, cost, or not having the resources to produce or finish a specific print job. That said, we are now talking about a different type of outsourcing as a trend: the one that refers to the expected growth of print brokers.
In a recent Keypoint Intelligence research study, we learned that almost 90% of a PSP’s cost is production (other sources might refer to slightly lower numbers, but the fact is that production is a very large cost for any PSP). We expect that, in these times of uncertainty and opportunity (Internet and online purchasing), more PSPs will be focusing on just promoting and selling print (to reduce very large investments’ risks), and then outsourcing production to large PSPs that only service the trade and offers very low prices (in some cases even lower than some PSPs can produce themselves for some specific print jobs). We are already seeing this online from some PSPs that don’t produce but can sell and distribute print via a PSP network (even in different markets/geographies).
| For an average print job, what percent of cost do you estimate that are attributed to… |
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Labor Shortages and Sustainability
There is nothing new about labor shortages in the printing industry. What is new is that they have grown bigger and more challenging. We predict (and see this as a fact in many ways) that PSPs are investing more in software automation and even robotics to not only reduce their costs, but also deal with labor challenges. In this case, as well as with sustainability, Europeans seem to be much farther ahead than Americans in terms of automation investments and sustainability focus.
Sustainability is very relevant and will keep growing as a concern. Print buyers want to be sustainable and need to be perceived as such. Corrugated is replacing some plastic-based materials in retail stores and displays (and even furniture) during events. Even though some people still question print sustainability and use paperless campaigns, these naysayers are expected to quiet down as print buyers become more educated. It is only a matter of time before they learn that print could actually be better for the environment than other channels and materials as it is highly recyclable and could have lower greenhouse gas emissions than information and communication technologies (ICT).
Other Trends
When it comes to applications, we also expect the growth of catalogs, magazines, direct mail, photo, and books in digital printing, as well as packaging in general. As the price of a printed finished product has grown due to the pandemic, we expect that some print buyers might reduce their orders’ print run lengths (which will favor digital print in general and some of the most popular applications). Other print trends include:
- In the case of magazines, online subscription growth can also shorten offset print run lengths—favoring digital printing.
- The mailbox is the lowest competitive channel for marketers, and it is also expected to drive great volumes of catalogs, brochures, and direct mail pieces that can be customized and have an e-connectivity via QR codes, augmented reality (AR), or even NFC tagging.
- Printed books will experience a comeback through the pandemic due to digital fatigue and the emotional connection/relationship with paper books. We are expected to keep growing in digital print due to the strong benefits of print on demand (not inventory) and the large diversity of book titles that drive shorter runs.
- Photo print volumes are expected to also shift from traditional silver halide to digital print due to workflow efficiencies, a great quality and consistency of print, more variety of substrates, and even a potential of lowered costs. Also, silver halide has been harder impacted by supply chain disruption and is perceived to be less environmentally friendly than digital printing.
- Packaging is expected to keep growing as long as there are products to pack and ship (and that is not expected to decline ever). Paper shortages favor packaging as a sustainable and strong application as some paper mills convert some of their machinery to produce packaging materials.
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