Here we go again - another non-announcement.
The announcement copied below can be summarised as follows:
- Our packaging business in the UK is stagnating
- We don't know how to reaach the end customers ourselves
- Our packaging business is the low-end commodity stuff that printers can buy anywhere, so we have to bribe them to buy it from us
- Our paper sales to our printers are declining rapidly
- To get any business out of our printer customers for paper we have to offer them silly payment terms and a massive inventory holding for them to pick and choose from, and now we are compounding the felony by doing the same with packaging.
- But this is even worse as we are now having to give away 50% of our margin to the printers for their packaging needs
- So if there is any growth from this "initiative", it will be revenue with 10% margin (packaging) replacing revenue with 20% margin (paper).
- We can't reach these customers ourselves because we don't know who or where they are, so we are going to pay the printers to do it for us thereby increasing our credit risk with them, reducing our margins, and tying up more cash in working capital (increased debt with printers and increased inventory holding).
Great move....!
Paperlinx launches 'win-win' revenue generator for printers
23 May 2013 ,
Paperlinx has launched a new 'risk free' bolt on service for its customers that will allow printers to supply their customers with packaging, paper and other media and add a new revenue stream to their business.
Carr: a low cost, no risk opportunity
"Our customers are buying paper to print on and therefore add value to, their customers may well want to buy packaging, copier paper or whatever and we can facilitate that and fulfil those orders," said Paperlinx UK managing director Phil Carr.
"Printers have deep relationships with their customers so we’re just trying to make that relationship stickier. What we’re doing is providing an income stream that printers would not have had access to before, importantly, without tying up their cash. It really is that simple," he added.
The service is known internally as "printers’ webstores" and the first webstore is expected to go live in the coming days, although Carr declined to reveal the name of the first user. PaperlinX is currently also in advanced discussions with another six customers.
In essence the service is a white label online storefront that printers can add to their websites. The storefronts will offer around 500 Paperlinx products, ranging from blank packaging, office paper, consumables and other media.
"Everyone we’ve spoken to sees the value in it, because we’re all experiencing a decline in volumes. It’s a low cost, no risk opportunity and people get that," said Carr.
"It stems from us trying to develop initiatives to enable our customers to bolt on new revenue streams. Of course if it’s good for their business, it’s also good for us because it continues our evolution from simply being a supplier of paper," added Carr.
The webstores will be branded in line with the printer’s own branding. They will be full e-commerce enabled sites where customers can pay by credit card, although invoice options will also be available.
Once placed, the orders will be delivered direct to the printer's customers via Paperlinx’s 250-strong logistics fleet, based across DeliveryCo’s 24 distribution hubs.
The products will be supplied at a fixed price, to ensure a common pricing structure, which will be set by Paperlinx across all printers’ webstores. Printers will then generate a pre-determined "healthy" commission based on order value, which will then be either paid directly to the printer or credited to their Paperlinx account.
"It’s a simple value added service for the printer to their customers, it plays into our strengths of logistics and breadth of products. We as merchants should be helping our customers to offer solutions to their customers and this does exactly that, it really is a win-win for all concerned," said Carr.
The pilot "printers’ webstores" service will initially be offered to 50 pre-selected Paperlinx customers, but Carr said over time it would be opened up. In terms of initial set up costs to the printer, Carr described them as "minimal", but he added that they would depend on a variety of factors, such as volumes.
While the service will initial focus on 500 products, Carr said that more products will be added over time – once the demand has been identified.
The scheme is being launched in the UK, but Paperlinx expects to roll it out across Europe by the end of the year.
Carr hinted that Paperlinx might introduce other similar initiatives in the near future, however he declined to reveal further details.
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