For nearly the past 10 years, mailing and fulfillment services have become growing operations within a printer's roster. The importance of this segment is illustrated in the flurry of new equipment introductions, seminars, consultants and even occupying the largest mailing and fulfillment area at last year's Graph Expo in Chicago. The Mailing and Fulfillment Center at Graph Expo '08 occupied a record 38,900 square feet of the show floor, and featured 73 exhibitors showcasing all the latest mailing and fulfillment systems, products, and technologies.
"Mailing and fulfillment is a logical extension of a printer's core services, and the potential for profits are great," said Ralph Nappi, president of the Graphic Arts Show Co. "The record-setting size of the 2008 Mailing & Fulfillment Center meant that newcomers to mailing and fulfillment, as well as veterans, could find exactly the technologies and information they needed to realize that potential and succeed in this area."
"Over the past decade, printers have been searching for new revenue streams and mailing and fulfillment services have been identified as a lucrative area to be captured in-house," said Michael Aumann, president and CEO of Buhrs Americas, a mailing equipment manufacturer.
Two of a Kind?
While mailing and fulfillment tend to be lumped together, they are two different entities and should be treated as such. Mailing encompasses the creation and production of the design and copy of the printed piece, merging it with the database of addresses, and ensuring that it is mailed to that list in a timely fashion. Fulfillment, on the other hand, is considered the act of warehousing certain print or premium collateral, such as brochures, presentation folders or promotional items for customers, and assembling those items into kits to be shipped to specific locations.
"Adding mailing and fulfillment services to a printer's in-house roster of services is a win-win for everyone," said Peter Doyle, workflow and integration manager at Muller Martini. "The printer gets to expand their offerings and grow their profit margin; the publishers reduce waste, minimize shipping costs for their customers, and are able to keep their mailing list more secure at just the printer's location and not at several mailing houses."
"Printers used to give away fulfillment services but now they are charging for it as value-added and it can pay for itself in one year," noted Tom Quinn, director of fulfillment for the Mailing and Fulfillment Service Association. "In a joint study with NAPL that we took of over 100 printers in a three year period, 81 percent of them added fulfillment services at their customers' request. Fulfillment services can provide double digit returns."
For the past four years, Printing Industries of America (PIA) studied the sales derived from mailing and fulfillment services of over 500 printers in the United States. The report states that in 2008, 4.34 percent of sales were derived from mailing, while 2.57 percent was derived from fulfillment. A year earlier in 2007, 4.39 percent of sales were derived from mailing and 2.81 percent from fulfillment; in 2006 3.50 percent was mailing and 2.61 percent was fulfillment; and in 2005 only 3.0 percent of sales were derived from mailing, and 3.11 percent from fulfillment. "While fulfillment has remained relatively flat over the past four years, mailing has increased," said Ed Gleeson, manager of economic and market research at PIA/GATF.
The Challenges We Face
One of the biggest challenges for printers who offer mailing services is a slew of new postal regulations in the first half of 2009, including a price increase, Move Update compliance, and the mandatory use of a longer "smart" barcode with more information to track every piece of mail. The USPS will implement the Basic and Full-service Options of the Intelligent Mail Barcode (IMB) on May 11 of this year. When the new regulation takes effect, printers need to have retrofitted their systems with new print heads to accommodate the longer barcode from 11 to 31 digits of information.
To be successful, printers need to become a liaison between their customer and the post office, said Mary Ann Bennett, president and CEO of The Bennett Group Inc., a training and consulting firm that specializes in the development and delivery of educational products for the mailing industry.
"Become a mail piece design analyst," Bennett continued, "that will enable you to provide more services to your customers. A smart mailer will teach their customer base how to design their mail pieces. In turn, this will generate postage savings for the customer and reveal new revenue streams for the printer. The post office offers over 3,000 postage discounts; printers need to identify for their customers these incentives to produce a mail piece that can claim the largest postage discounts from the post office."
Making it Work
Successful printers who offer mailing and fulfillment advertise their expertise and efficiency to gain customers. For example, Offset Impressions Inc., a Reading, Pa. commercial printer, just introduced its new division known as OI Advantage 2 in February, that provides full-service mailing, fulfillment, and distribution capabilities.
Offset Impression claims it can maintain full control of print production from disc to distribution, as well as offer the consultative ability to tailor print projects so they move more quickly from file to the mail stream. At the new OI Advantage 2 facility, the staff has the equipment to manage all their clients' mailing, fulfillment (including creating kits and Pick and Pack services) and distribution of their printed products.
"Mailing and fulfillment is brand new to our company," said George Ruth, president. "We began to look into these services in August 2008. The process included purchasing and refurbishing the building next door, hiring an individual to manage the operation, and purchasing the pallet racks, inkjet equipment, and all the other various materials and equipment necessary. The biggest challenges were the purchase of software and the appropriate equipment. Since we began with purchasing used but refurbished equipment, it took some time to find the right equipment for us. Also, getting the building constructed in the appropriate way to handle this additional workload took time. Getting the proper permits, contractors, and all that type of stuff was more than frustrating. Also getting our external and internal communication systems (fiber optics) in place took extended time."
Currently the new division has added about 3-4 percent billable time to the overall operation. But also, as hoped for, the addition of these services has brought new customers that have added volume to the print facility as well. Ruth expects that the new division will, over the next five years, increase sales/revenues for the entire company by 22 percent, and increase print sales by 12 to 15 percent. He notes they haven't closed the gap on the building overhead, but have captured the return-on-investment from the equipment purchased and the personnel hired to fulfill production.
"It's especially important to have trained professionals help companies with the U.S. Postal Service requirements, which change constantly," said Ruth.
"Companies need to follow new mandates for address hygiene, requiring extra attention to detail. Experienced personnel at Offset Impression's new 43,000-sq-ft facility maintain full understanding of these requirements. There are so many fine details concerning fulfillment that it is often misunderstood. One of our most important attributes is taking the confusion out of the process. We help our customers through the maze of understanding postal regulations, mailing and printing specs."
New postal regulations that present discounts for consolidating mail are encouraging big growth in co-mailing. In early March, Fry Communications and Brown Printing enhanced its co-mailing abilities. By teaming with logistics firms and integrating new varieties of mailing list processing software to digitally controlled finishing lines, these printers are extending the reach and range of offerings to a wider range of clients.
Competing publishers who share the same printer may find their mailings are co-mingled in the finishing line, speeding delivery and accruing savings to both. Fry Communications, Mechanicsburg, Pa., even extended the co-mailing savings to non-print customers, acting as a mailing consolidator for other printers' clients. Brown partnered with an external logistics firm, ALG Worldwide Logistics in Wood Dale, Ill., and its sister company Print and Mailing Solutions (PAMS). With this partnership, Brown has more than doubled its co-mail volume and more than tripled overall co-mail capacity. With the increased volume, customers will realize greater postage savings. In addition, Brown will be able to offer additional capabilities which include expanded trim size range, significant improvements to inkjet font capabilities and positioning, improved polybag capabilities and tighter in-home delivery windows.
"This additional co-mailing horsepower is a great benefit to our customers who have readily embraced it in view of rising postal rates and continued discounts offered to efficient mailers," said Steve Grande, Fry's vice president of sales. "A few years ago we needed to convey to customers the benefits to consider co-mailing; today on-site co-mailing is a de-facto requirement in the vast majority of all customer inquiries." Fry's on-site co-mail facility also recently announced its ability to co-mail poly-wrapped products. On-site co-mailing provides for expeditious mail processing and compressed "close to in-home" cycles for mailers.
In another boost to mailing, insert printing giant Valassis has decided to distribute its coupons by mail and discontinue the insertion of its printed coupons in several newspapers throughout Ohio, Indiana, Pennsylvania, New Jersey, Utah, Virginia, Washington, D.C., North Carolina, Maryland, and Texas.
A Careful Decision
Both mailing and fulfillment can raise a printer's sales volume, but need to be fully analyzed before plunging into one area or the other.
"Fulfillment can be a lucrative service to offer," noted Bennett. "Say you print a campaign for a customer and you insert a reply card into the campaign. For those who reply, they get a tea pot or some other premium gift. You tell your customer that you'll handle those services for them. So you expand your warehouse to hold the premiums. You hire part-time workers and charge the customer to do Pick 'N Pak. You tie the account into your UPS or FedEx account."
However, noted Quinn, unlike mailing services, fulfillment requires the need to control inventory, which he says is no easy task.
Bennett cautioned that mailing does not provide as high an ROI as fulfillment, but it is easier to get into. "Mailing equipment is well-made and will last a very long time," she said. "It's easy to buy used equipment to enter into the market. But you may want to buy new cameras, inkjet heads, and software to take advantage of current technologies. However if you mess up a mailing job for a customer, you may have to re-print it, pay for the postage again, and perhaps be charged postage penalties, all with an unhappy customer because you missed their mark in distributing their mail. To avoid this financial risk, printers can purchase an errors and omission insurance policy."
A Few Products To Consider
For printers who are interested in adding mailing and/or fulfillment, here are a few resources to look into.
This past fall, Bowe Bell + Howell introduced NetSort, a new sorting software platform that supports full-service use of the new postal service's Intelligent Mail barcode (IMB). NetSort allows mailers to take advantage of discounts that will be available through full-service use of the IMB. The firm also launched a redesigned version of its JETVision Platinum system for letters, flats and 6x9-inch mail pieces produced on new, legacy and third-party equipment.
JETVision Platinum offers top and bottom reading capabilities, and handles both portrait and landscape mail piece orientations ranging from one page to three-quarters of an inch thick. This flexibility provides mailers with a single solution for handling multiple jobs, applications and systems, and minimizes setup and downtime as well as the number of technologies needed to ensure corporate, postal and regulatory standards are met.
And Buhrs Americas recently introduced its BB700 Pocket Envelope Inserting System, a new, higher speed version rated at 16,000 pieces per hour—a 2,000 piece-per-hour increase over what was already the fastest multiformat inserter on the market. The distinguishing feature of the BB700 is its format flexibility; it operates at rated speed over the widest range of envelope sizes in the industry.
Debora Toth is a freelance writer who has been writing about the graphic arts industry for 25 years. She also is a public relations specialist and operates Coastline Public Relations. She can be reached at email@example.com.
Upcoming M&F Shows
- The Mailing and Fulfillment Service Association will be holding its annual conference and exposition from June 3-6 in Chicago. For further information, contact Mailing & Fulfillment Service Association, 1421 Prince St., Suite 410, Alexandria, Va. 22314, (703) 836-9200, www.MFSAnet.org.
- The Bennett Group will be offering several seminars at the On Demand Show from March 30-April 2 in Philadelphia. These include "Printers Expanding Into the Mailing Industry: 10 Steps to Success" on Tuesday, March 31 • 11-11:50AM, presented by Mary Ann Bennett, president and CEO, The Bennett Group, Inc.; "Increase Print Revenues by Maximizing Postage Savings with Mailpiece Design" on Tuesday, March 31 • 3:30-4:20 p.m. presented by Mary Ann Bennett.; and "Implementing the Intelligent Mail Barcode and Software Panel Discussion" on Wednesday, April 1 • 10:10-11:00 a.m. presented by Mark Higgins, vice president of marketing and data services, BCC Software, and Mary Ann Bennett.