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.