Special Report: E-Commerce and the Document Management Industry
In 1998, the business-to-business (B2B) market on the Web averaged $3.1 billion in spending, according to the Internet Business Center (www.ibizcenter.com). By 2004, Forrester Research Inc. (www.forrester.com) says online business trading will hit $2.7 trillion. "Online business trade in the United States has hit hypergrowth," says the Forrester study, published in February.
The printing industry is not immune to the frenzied growth in e-commerce. In the past two years, more than 30 companies have begun offering printing solutions via the Internet. These dot-coms offer everything from request-for-quote management and auction services to online inventory management and ordering systems. (For thumbnail profiles of 33 printing-related dot-coms, go to http://www.dmia.org/sol_center/enewsletter/enews_articles/dotcoms82000.html.)
Companies as large as Moore and Reynolds and Reynolds and as small as 1-person distributorships can—and are—getting involved in e-commerce.
"E-commerce will have a tremendous impact on virtually every aspect of the printing industry," says W. Charles Calman, president of New York-based PSI Group Inc. and president of DMIA. Calman views e-commerce positively. "There's opportunity to carve out a niche and build business if you buy into e-commerce. There's a place for you in this market, provided you do something."
Where to Start
Simply put, e-commerce is the buying and selling of goods and services via the Internet. But there are so many options and providers, the decision on how to proceed with an e-commerce solution is anything but simple. Should you sign a licensing agreement with a dot-com, buy a print industry software developer's e-commerce solution, utilize a print manufacturer's solution or build your own B2B Web site? DMIA's Board of Directors has discussed e-commerce at length, and although the Board doesn't endorse a specific solution, its members offer advice for getting involved in e-commerce:
- Get beyond your fears. Most importantly, don't let e-commerce intimidate you. "The fear of e-commerce is greater than the actuality," says Mark Trumper, CEO of MaverickLabel.com in Edmonds, Wash., and treasurer of DMIA. "It's not as complicated as you think. You don't have to know all the coding and technical stuff. You have to understand the possibilities."
- Take a good look in the mirror. Analyze what type of company you are and what type of company you want to be. Similarly, examine your customer base and its needs. "Ask yourself, 'If I don't offer e-commerce, what will happen?'" says Trumper. "Then ask yourself what the implications are if you do offer e-commerce."
- Educate yourself. Learn as much as you can about e-commerce. DMIA publications, including the Independent Management Report, FORM Magazine and the Business Printing Technologies Report have covered the topic. In addition, the association's Informservices 2000 Conference & Expo (i2000), to be held Oct. 18-20 in Chicago, will include a 3-day E-commerce Summit.
"Small distributors often feel DMIA is geared toward large distributors," says Phil Schmidt, president of Advanced Systems & Forms, a distributorship in Livonia, Mich. "I consider myself a small distributor, and I want other small companies to know that DMIA offers education to all distributors and manufacturers."
If you master the technology, you can remain small, but become more secure, says Calman. "If you have a strategy and are committed to it, the Internet has one thing that distributors can use to their advantage," he says. "It allows small distributors to appear larger than they are."
- Seek alliances.
"If you can't deliver the technology yourself, then seek partners who can," says Trumper. These may be dot-coms, software vendors, other distributorships or print manufacturers. "In the '80s and '90s, alliances were sexy," says Trumper. "Now they're a matter of survival."
- Compare e-commerce solutions.
Ask dot-coms, software vendors and other companies offering e-commerce solutions to demonstrate their products. There are varying approaches to the market. "Some dot-coms want to service the end user market. Some see the distributor channel as a real opportunity for growth. Still others are testing the waters to see which direction they should take," says Michael Hurley, CDC, with iGetSmart.com, an Internet service provider offering an e-commerce solution to distributorships.
- Decide which e-commerce model best fits your needs and those of your clients. "Nobody has the ultimate answer," says Pete Mattson, president of MHC Companies, a distributorship in Burnsville, Minn. "Even if you sign up for a certain e-commerce solution, keep looking."
- Be proactive. After you learn the basics of e-commerce, discuss the technology with your customers. "Show clients that you have the capabilities to help them with e-commerce," says Calman. "If they're not ready today, that's OK. When they are ready, you as a DMIA member will have the solution."
Mark Trumper, CEO
MaverickLabel.com
Edmonds, Wash.Schmidt's biggest customer is a distribution company with 55 branches. Six months ago, he talked to the client about setting up an electronic catalog so its branches could order products more easily. The chief financial officer of the company declined because not all of the branches had Internet access. Four weeks ago, the CFO called Schmidt: "We want it now," he said. "How fast can we have it?"
"It's good news and bad news," says Schmidt. "Now I have a reason to move along." Advanced Systems & Forms hired a firm to design the electronic catalog. It's weighing options for e-commerce solutions, such as buying a software vendor's package. Schmidt says his company will start with a basic solution. "Right now, I don't feel we're big enough to justify a $30,000 or $50,000 custom package," he says. "Initially, we'll do a simple version."
- Commit to R & D."Making the decision to enter e-commerce is neither easy nor inexpensive," says Calman. "You'll need to budget more time and money on an ongoing basis than you're accustomed to."
- Start small. Like Schmidt, consider implementing a simple system or testing e-commerce with one loyal customer. "You can't do everything at once," says Buster Weinzierl, CDC, president of Belknap Business Forms, a manufacturer in Mayville, N.Y. "Bite off the chunks you can deal with."
- Offer value-added services. "It's true that some companies may be in trouble because of e-commerce," says Gail O'Roke, CFC, president of The Independent Business Group (IBG) in Hayward, Calif. "But it's only those who aren't adding value to the equation anyway." Make sure you provide clients more than commodity products. Offer process analysis, inventory control, warehousing, pick-and-pack services, fulfillment, consulting and more.
"If distributors align themselves so they are adding value, they will continue to be very valuable," says Dan Siadak, CDC, president of RBF Inc., Lansing, Mich., and distributor vice president of DMIA. "Then, e-commerce is an opportunity. It's a tool to help facilitate communication and increase the efficiency of transactions from end users to distributors to manufacturers."
4 Myths About E-Commerce
Some document management pros are hesitant to get involved in e-commerce. Companies cite a few key reasons for their reluctance. Here are some of the reasons, and input from DMIA's Board members that may debunk some myths about e-commerce technology:
1. E-commerce technology is too expensive for me to implement. "There are extensive and less extensive ways to get involved," says William Colborn, president of Fiserv Document Solutions, a distributorship based in Bellevue, Wash. "You need to decide how you can fit e-commerce into your cost structure." You can start small, offering select products via the Internet. Or, you can rely on e-commerce packages developed by other companies rather than design your own custom—and expensive—solution.
W. Charles Calman, President
PSI Group Inc.
New YorkIn addition, e-commerce is a tool that will eventually save you money. "Distributors and manufacturers are looking for ways to drive costs out of the transaction and increase profitability," says Hurley. "Utilizing the Internet to transact business reduces the amount of contact distributors and manufacturers have with an order and frees up employees to perform other functions." E-commerce doesn't replace people, however. "It allows you to maximize the money spent on labor," says O'Roke. "It puts tools in the hands of people so they don't spend their time on drudge work." For example, letting clients order business cards via the Internet may reduce the hassles of offering this typically low- or no-profit product.
"When a company is totally integrated--from order-taking to selecting manufacturers to shipping products--the time and cost savings of e-commerce will be great," says Schmidt.
2. My customers aren't interested in e-commerce. Two years ago, Fiserv conducted a customer survey. Its clients overwhelming stated that they weren't interested in doing business via the Internet. Just one year later, 95 percent said they wanted to conduct business using e-commerce technology, although they weren't sure what form it should take. Today, some clients are calling Fiserv to implement e-commerce. "If anyone pretends that clients aren't thinking about e-commerce, they're fooling themselves," says Calman of PSI Group.
Schmidt learned that the hard way. The buyer for one of Advanced Systems & Forms' accounts attended a meeting where a representative from a dot-com firm was the featured speaker. The buyer was intrigued by the prospect of ordering online, so he tested the technology with a few print items. Because the client designed the pieces in-house and knew the specifications on the pieces, ordering electronically was easy. "They just emailed the company copy, and bam, they had the order," says Schmidt. The dot-com also charged 40 percent less than Advanced Systems & Forms. "Right now, it's an isolated case," says Schmidt. "But I'm not naive enough to think this can't happen again."
Once you commit to e-commerce for one customer, you can more easily offer the solution to others. "Often a distributor, especially a small distributor, needs to have one major client who is clamoring for connectivity to justify the expense and the time involved to get started in e-commerce," says Hurley. "Once that happens, the distributor gains experience selling this type of solution and expands it out to other clients."
3. I can't compete against the low prices offered by dot-coms. Yes, you may lose some sales like Advanced Systems & Forms did. However, by providing value-added products and services--the same things you offer to compete against direct-selling companies--you'll probably maintain market share. "On simple commodity products based on price, we can't compete," says Schmidt. "We have to stress our value-added features and find more to give our customers."
4. E-commerce is impersonal. On its face, e-commerce is impersonal. But just because you offer an e-commerce solution doesn't mean you abandon your relationships with clients. "Don't forget that we're a people-to-people industry," says Weinzierl. "There must be personal contact." Continue to provide clients personal service, workflow analysis, consulting and so on. "It's very hard to offer those things over a computer terminal," says Schmidt.
A Tale of Two Sites
Distributorships today offer so many solutions that painting a picture of a "typical" distributorship is difficult: Some offer only traditional printed products, while others have added complex commercial printing, ad specialties and office products to the mix. Some companies provide a variety of services, from warehousing and fulfillment to electronic statement processing. Still others have carved a niche in technology solutions, including electronic forms and bar coding systems.
As distributors venture into e-commerce, the solutions they choose will be just as varied as the products and services they sell. There isn't a "one size fits all" e-commerce solution for document management pros. Taking a look at how two DMIA Board members are approaching e-commerce proves this point. O'Roke of IBG is dipping her toes in the e-commerce pool. Meanwhile, Trumper is diving headfirst into uncharted waters. This year, he founded MaverickLabel.com, a B2B e-commerce site.
Like many companies, IBG has dabbled in Internet technology. It relies on email and operates a Web site (www.theibg.com) used primarily as a marketing tool. But O'Roke recognizes the power of e-commerce and realizes her distributorship needs to become involved. "E-commerce is not going away," she says. "If you don't offer e-commerce and that's what your clients want, you're in trouble." O'Roke knows this first-hand.
IBG sells $3 million worth of office products each year. A few of its hospital accounts and one accounting firm are pressing the distributorship to sell office products online. So O'Roke has opted for an e-commerce solution offered and maintained by DDMS, the software developer that provides IBG's order entry and distribution software for office products. IBG will link to a Web site with 48,000 SKUs of office products, including photos and descriptions of all the products. Each page will bear the distributorships' logo and name.
IBG's customers, who will access this electronic catalog through the distributorship's Web site, will click on products they want and add them to their "shopping carts." Orders will be automatically input into IBG's order entry system, then filled the same way as fax and phone orders entered by the distributorship's order entry personnel.
Setting up this e-commerce solution has cost IBG $2,600, and the distributorship will pay a transaction fee of $1.50 per order if it generates less than 500 orders per month. The transaction fee decreases as order numbers rise. Overall, says O'Roke, this is a simple, inexpensive way to enter the e-commerce market. Her company has not yet decided how it will offer printed products via the Internet.
At the other end of the spectrum is Mark Trumper's solution. Trumper was CEO of Merrill Corp., Resource Management Division, a distributorship in Redmond, Wash., before launching MaverickLabel.com earlier this year. He started the B2B company, which he terms a "manu-distributor," with his partner Rich Kent, who has a medical degree and an M.B.A. from Stanford.
MaverickLabel.com offers labels, decals, name plates, bumper stickers, magnets and control panels for ID switches, and controls on equipment. The site is designed for companies that know what kinds of labels they need and can plug information about materials, color, quantities and so on into MaverickLabel.com's system. Once orders are placed, Trumper's company produces small runs in-house on custom digital presses and outsources large orders to label manufacturers.
At the heart of MaverickLabel.com's e-commerce solution is its Instant Quoter. This section of the Web site asks users for information about label orders. For example, clients enter label size, gap and cut, substrate and color. The Instant Quoter also provides setup options. For instance, it asks if the job is a repeat order, a new order with an Adobe Illustrator or CorelDraw file, a new order with camera-ready art and so on. During any stage in the process, users can click a button if they need more information or help.
After entering label information, users click a button and receive a quote within seconds. They can click a button to place the order. After orders are placed, customers can view proofs online. MaverickLabel.com, which currently has about 400 customers worldwide, delivers most orders in two to three days.
MaverickLabel.com's e-commerce offering is a complex, custom solution. Kent designed the custom quoting system, and the site also relies on an Oracle database and other custom software. "There are a lot of plug-and-play e-commerce packages available," says Trumper. "But the top-of-the-line stuff isn't canned." According to Trumper, it has taken 500 man-hours and six figures to get MaverickLabel.com up and running. But he's hoping the combination of a user-friendly Web site and solid back-end solution will make MaverickLabel.com a success. "If you can marry technology with world-class customer service, there's a future in e-commerce," says Trumper.
Easy Ways to Get Involved
Most distributors aren't going to launch a site like MaverickLabel.com or invest millions of dollars to develop a solution like the printing dot-coms. But there are several other viable options. "Don't get caught up in the hype of what high-end developers are doing with tens of millions of dollars," says Calman. "There are lots of ways to take baby steps in e-commerce that will lead to bigger things." Some of these steps may not be viewed as true e-commerce, but they're a start.
First, begin using email for more functions. Clients can easily email orders to you, and you can send order confirmations and proofs back to them. Calman suggests digitizing requisition forms in a PDF file on your Web site. Clients can pull up the forms, download them, fill them out and email or fax them back to you.
Pete Mattson, President
MHC Companies
Burnsville, Minn.Consider starting with one product line, such as business cards and stationery. Partner with a manufacturer that offers these products to develop electronic templates customers can use to design, edit and change their printed pieces. Use the system initially for reorders. Or, you may partner with a manufacturing firm with diverse capabilities that offers an e-commerce solution you can utilize.
No matter which route you choose, test the system. Fiserv is a licensee of Four 51°, a dot-com company focused on the distributor market. The distributorship will go live this month with an e-commerce solution for one client. The customer has 100 subdivisions that order a variety of products, including business cards, letterhead and checks. Fiserv will start by testing the system with three locations near a Fiserv sales office before introducing e-commerce to all the subdivisions.
Remember that whatever method you choose must meet clients' needs. "Talk to your customers, and find out what they're trying to accomplish," says Calman. Siadak's company, RBF, is researching e-commerce options. No matter which path it takes, however, the distributorship will tailor solutions to clients' needs. RBF currently offers several high-tech tools to customers: Some customers have direct hook-ups with RBF so they can dial into the distributorship's computer system to release products from the warehouse, check order status, price items and more. Others send electronic requisitions via email. Still others use electronic data interchange.
Above all, e-commerce must be user-friendly. "E-commerce better be efficient, quick and easy," says Trumper. "If it's not, it's just an electronic brochure." Calman agrees. "If users can't do what they need to do easily," he says, "they won't use e-commerce." Not with your company, but maybe with a competitor. So it's critical to learn about the technology and embrace its opportunities.
"The impact of e-commerce will be significant," says Weinzierl. "There will be a new way of life. It's hard to predict where it will bottom out, but e-commerce is going to become pervasive."
E-Commerce Checklist
Terry A. Nagi, a print marketing and sales consultant for the past 17 years, envisions a new age for printers. In a presentation on e-commerce, he encourages companies in the printing industry to adopt a project plan for implementing e-commerce. As part of the plan, Nagi suggests companies answer these 20 important questions:
1. How will you be an e-commerce leader?
2. Where will you be in one year? In five years?
3. What are your goals?
4. Who are your key players in this process?
5. Will you opt for piecemeal development?
6. What are your competitors and peers doing?
7. What are your minimum requirements?
8. Will all areas in your company be impacted? What will the impact be on sales, customer service, estimating, production, distribution, fulfillment, etc.?
9. What products will you provide initially?
10. How will you ensure repeat business?
11. What are the current and future geographic and demographic characteristics of your e-commerce solution?
12. What are your priorities?
13. How will you breakdown your plans into manageable units?
14. How are you currently selling, and how will this change?
15. How do you currently track orders?
16. How do you distribute products to customers?
17. How do you order and receive inventory?
18. What accounting takes place, and what are your current accounting systems?
19. What additional hardware and software do you need?
20. Will you buy or build a solution? Host or outsource a solution?
Terry A. Nagi is president of DigitalPrint Resources, a sales and marketing firm in the printing industry. You can email Nagi at TANagi@aol.com, or call him at (800) 790-3614.
Benefits of E-Commerce
1. It reduces sales time and cost of sales. "If you do it right, it will reduce your costs," says Mark Trumper, CEO of MaverickLabel.com in Edmonds, Wash. "You won't need a lot of staff if you build a customer-intimate site."
2. It allows distributors to cover a broader geographic area. "You can be a national firm and still live in a small town," says William Colborn, president of Fiserv Document Solutions, a distributorship based in Bellevue, Wash.
3. It provides entry into new markets, such as computer or office supplies. "If distributors have not been in that market, e-commerce is a good option," says Vicki Zuber, vice president of sales for Creative Dataproducts, a distributorship in Greenville, S.C. "It's a good 'in' to new business."
4. It allows for around-the-clock business. "It gives us a 24-7 operation," says Buster Weinzierl, CDC, president of Belknap Business Forms, a manufacturer in Mayville, N.Y. "A lot of communication and business can be done without employees at their desks."
5. It keeps salespeople excited about the industry. E-commerce is an exhilarating, fast-paced technology that may keep your staff enervated and attract new, young employees.
6. It's good public relations. "Clients see so much on the Web," says Colborn. "If we're not there, we look bad."
7. It can protect your accounts. "Once you set up a client on e-commerce, the pain to make a change is a lot greater," says W. Charles Calman, president of New York-based PSI Group Inc. and president of DMIA.
E-Commerce Summit at i2000
DMIA's Informservices 2000 Conference & Expo (i2000) will offer document management pros more than just an eye-opening trade show floor and networking opportunities. The event, to be held Oct. 18-20 at the Navy Pier Convention Center in Chicago, will feature an E-Commerce Summit. At the 3-day summit, printing industry dot-coms, including Collabria Inc., iGetSmart.com, Four 51° Inc., ImageX.com and InaQuest.com, will explain their strategies and offer insight on how e-commerce will change the printing landscape.
The i2000 Expo costs $20 for DMIA members. The i2000 Conference, which includes the E-commerce Summit, costs $395 for DMIA member delegates and $325 for additional DMIA member delegates. For more information, or to register for the conference online, go to DMIA's Web site at www.dmia.org and click on "Exhibitions and Meetings." The site, which is updated frequently as i2000 programs and attendee lists develop, includes an exhibitor index, a tentative schedule of events, informational links about Chicago and more. Or, call DMIA's Meetings department at (800) 336-4641.