To the trade only
What does the term “to the trade” mean to you? My first thought was the small sign I saw tucked into the corner of a furniture or fabric showroom in a merchandise mart signifying that business was conducted only with retailers and interior designers – not the end customer. It said “do not enter” to me, a consumer.
After speaking to a number of companies who consider themselves to be true trade printers, it was made clear to me that there is a sharp distinction between a trade printer – “to the trade only” – and a commercial printer who sells both to end users and to other commercial printers at the same time.
According to The New Business of Distributing Print, sponsored by Print Education & Research Foundation (PERF), an auxiliary foundation to Print Services Distribution Association (PSDA), the trade association for print distributors and trade manufacturers, nearly 2/3 of companies who describe themselves as trade printers also sell direct.
For purposes of this article, we are going to define a trade service provider as a printer, laminator, finisher or bindery that sells only to other commercial printers or channel partners such as brokers, distributors, agents or resellers.
Relationships between trade service providers and their customers generally fall into two categories. The first, and probably most common, is a transaction relationship; you might call it job work or spot buy. For a commercial printer with an immediate project, a trade partner is there to fill in on short notice and at the right price. In this case, the relationship is based on price and ability to deliver, and the trade printer and commercial printer may work together only once or on an irregular basis.
The second type of relationship is built around a trade printer as a supply chain partner to a commercial printer or broker, distributor, reseller or agent. The term “partnership” is used here to mean a close working relationship; and the trade printer has a vested interest in the success of his commercial printer partner. The commercial customer might supply the paper, develop the specs, and their job planners will work closely with those of the trade printer. Both partners may even implement complex job engineering and logistics management on larger, more complicated projects.
Trade printers have invested in equipment that their commercial printer customers can’t easily buy, such as a 10-colour press. In essence, the trade printer is selling time on his 10-colour press to his commercial customers. As a result, the commercial printer can offer a much wider range of products without having to make a major – and potentially risky – investment.
Through these relationships, trade printers can offer their commercial print partners knowledge of production processes, better technology infrastructures and best of breed practices to deliver quality production needed within the time frames required.
Several trade printers I spoke to reiterated that while as much as half of their business comes from transaction customers, you can “only chase price for so long.” Long-term relationships are extremely important.
Close partnership between a trade printer and commercial printer or reseller can incorporate some pretty sophisticated integrated technology. Web-to-print and online estimation are two common “customer-facing” applications.
There are arguments for and against automated online estimation and pricing. I spoke to trade printers on both sides of the discussion and there are legitimate reasons for each approach.
Online estimation pushes a large part of the responsibility to understand the job and its specifications onto the channel partner. If the buyer is a commercial printer, an online estimating tool can be very effective; after all, who knows better about print processes than a commercial printer?
However, if the buyer is an agent, distributor or reseller, he/she may not be as knowledgeable about the processes and able to use an automated system as effectively. If the buyer makes a mistake, the end result may be a job that could have been produced less expensively when estimated by someone more knowledgeable or experienced.
Because small commercial or digital printers and copy shops now have the opportunity to bid on larger more complex jobs, their trade printer partner can provide a lot of knowledge and support to help deliver those projects.
Whether price quotes are delivered automatically or through a CSR, the key is to turn them quickly so that the commercial printer or reseller can respond to his customer faster. Speed is of the essence when bidding on print jobs; the project most often goes to the fastest respondents.
Some trade printers who specialize in products such as business cards, greeting cards, photo books and other items that can be templated, will offer web-to-print solutions and branded storefronts.
Using these storefronts, quick printers and small commercial printers can offer a much wider range of products as resellers and take on limited risk. The end user selects, modifies and pays for the product online, and the reseller receives a portion of the sale.
Benefits of working with a trade service provider
Partnering with a trade service provider yields a number of benefits to both commercial printers and resellers stemming from the fact that you can deliver print projects produced on equipment you don’t own.
Job in hand – no capacity
More than half of the work flowing into trade printers’ plants comes from commercial printers who simply don’t have the capacity to produce the job in the time frame the customer requires. Outsourcing to a trade printer – as a spot buy – is a common tactic to satisfying a customer.
On the whole, overcapacity is a problem in the print industry, why buy more equipment and try to keep it running when you can partner with a trade printer and use his/her equipment when you need it?
Expanded product offering
Customers who have a wide range of needs may buy from a number of print service providers – they act as their own general contractor to meet their various print needs. A commercial print partner can extend their own product or service offering by partnering with a trade partner that has different capabilities, thus, generating more revenue from existing customers or adding new customers.
Testing new products
By partnering with a trade service provider, a channel partner can test new products and build a new base without the risk of investment in expensive equipment. A commercial offset printer can test new digital offerings, a small format digital printer can test wide-format products or a printer can expand a wide variety of finishing and binding options. Should one or more of the new products or services prove to be profitable, the commercial printer can then invest in the technology knowing that it will be successful.
Tap into knowledge and expertise
A trade laminator or finisher has a huge amount of expertise around his/her service, after all that’s what his operation does all day, every day. A commercial printer may have some finishing equipment, but trade finishers are often faster and less expensive than in-house solutions.
Why? They are experts; they understand the processes completely. Trade service providers use “production-level” equipment that is faster and more efficient, and they can buy supplies and consumables at better prices because they buy in volume.
A relationship built on trust
Working relationships between manufacturing partners are by nature a delicate balance. The working arrangements can range from “casual dates” or “going steady” to “long-term engagement” and in some cases even “marriage.” All of those relationships require some level of trust between the partners.
One of the major concerns that a printer who is considering a trade partner raises is this: “Will a trade printer ‘steal’ my customer, and use our relationship to identify new prospects and then go directly to my customer, cutting me out of the relationship?”
A print service provider who promotes his business “to the trade” only has his/her reputation to speak for the company. Channel relationships are built on a foundation of trust and doubt and skepticism can develop because people have not always honoured that trust.
There are three key elements to building a trusting relationship:
- Trust is built over time
- A trade printer must be “faithful” and not do business with any client’s customer
- A broker, distributor, agent or reseller can’t “bait-and-switch.”
Over and over again, I heard the same message: there must be trust between the trade service provider and his/her channel partners. That trust takes time to develop, and it can be lost quickly.
For a commercial printer working with a trade printer, there has to be a very high level of trust. Press checks, for example, mean that a print buyer will be in the trade operation. The trade partner must know that the trade supplier is not going to call on his/her customer.
A trade supplier who focuses on channel partners wants them to be his/her sales force; the trade supplier doesn’t have the feet on the street to sell direct, nor does he/she want to.
On the flip side, I’ve heard stories of brokers or distributors who work with trade suppliers to engineer complex jobs, even to the point of developing prototypes, and then give the job to someone else. Resellers who practise “bait and switch” tactics to simply get the lowest cost and highest margin are burning their own bridges.
No trade supplier is going to develop a long-term relationship with someone who is clearly taking advantage of his/her knowledge and expertise for short-term personal gain.
Over and over again, it was expressed to me that printers who print for end customers and other printers are not true trade printers. It may be hard for trade suppliers to stand their ground as a wholesaler and sell only to commercial printers and resellers – and not to end users – in these difficult economic times.
That said, to keep the balance of the market, and to maintain that trust, the trade printer should not reach out to the end customer. If that decision is made, the trade printer is no longer “to the trade only” but competes on the “commercial printer” playing field.