The hottest opportunities for print providers looking to diversify their business is … well, it’s print. But we’re not talking about ordinary print — we’re talking about digital production and industrial print.
Unlike some of the more exotic diversification strategies we’re seeing in the dealer channel today, production print is much more in line with your core business. You already have good relationships with print manufacturers (and print buyers), and the business model isn’t much different from the one you’ve mastered already. Likewise, it doesn’t take nearly as much time or money to upskill existing sales and technicians to work with production print as it does, for example, to hire the requisite labor to launch a managed IT or cybersecurity practice.
But that’s hardly the most convincing reason for a dealer to jump into the production print space. There are several trends that signal that the production print industry is primed to explode. So, let’s explore these trends below, identify some interesting angles, and see what it means to your business.
The total addressable market for digital production print is growing
Part of the reason production print is becoming so appealing is that we can do things that were not possible in the past. Printing on unusual substrates? It’s doable. Running small batches of customized runs? No problem. Automating labor-intensive and time-consuming tasks? Absolutely!
Production print costs have come down to the point where businesses that once outsourced print, packaging and signage work can buy their own device and bring those processes in-house. With the rise of digital production print and workflow automation software, it has never been easier or cost less to operate production print. This is good news for the production print industry, as it expands the total addressable market far beyond where it sat just a few years ago. Businesses that couldn’t justify the cost in the past can do so now.
Undoubtedly, a certain percentage of your accounts will fall under this newly expanded region of production print’s total addressable market. With production print solutions in your portfolio, you can cross sell into that part of your existing base or try to displace competitors from accounts you’ve been chasing. You can also use production to start conversations and sell to organizations that you thought you’d never do business with.
The rise of digital production printing has also made it economically feasible for print services providers to meet the growing demand for on-demand, short-run, customized jobs. Small businesses don’t have to order 1,000 labels when they only need 500 and dedicate extra storage space for extra labels; print providers don’t have to pass up work. With more work headed their way, demand for machines should increase, too.
Packaging trends indicate strong growth ahead
Buying behavior and lifestyle changes represent an excellent opportunity for office equipment dealers to enter the digital package printing space. More people are shopping online than ever before, and they’re doing it more often. According to the latest Pitney Bowes Parcel Shipping Index, 37% of all purchases were made online, and 23% of shoppers were shopping online more at the end of Q1 2022 than they were at the beginning of it.
As more sales occur online, so will the volume of packaging needed to ship products to customers. Don’t forget, just because a sale is made online, that doesn’t mean the appearance of the packaging isn’t important. Online sellers can use elaborate packaging to create an engaging and memorable unboxing experience — winning the customer over before they ever use the product. This can be particularly helpful for new, smaller online players who are looking for any and every way to stand out from the crowd.
We’re witnessing the rise of the “side hustle” — especially among the younger generations — and this is something dealers should pay attention to. According to Microsoft’s Work Trend Index 2022, “70% of Gen Z and 67% of millennials say they are considering earning additional income via a side project or business in the next year.” Indeed, these businesses will have an impact on the overall packaging volume, ensuring that PSPs are busy and in need of machines.
It’s not too late to join the digital package printing party — there is big growth ahead. According to Markets and Markets, the global digital print market is expected to grow from $29.4 billion in 2022 to $45.1 billion by 2027 (a CAGR of 8.9%). The research firm also said that North America is expected to be the second largest market for digital printing of packaging.
Wide-format (and digital) signage
With more people buying online than ever, “in-person” businesses must also do everything they can to get customers in the door and making purchases. Signage is going to play a big role in this fight. Colorful signs pull the customer’s attention right where you want it and use bright and vibrant large letters to make sure they get and retain the message.
The FESPA Census Report found that 72% of print businesses are seeing increased demand for faster turnaround times, and that 59% demanded just-in-time deliveries. But thanks to the development of easy-to-use design and workflow automation software, plus the affordability of wide-format, businesses can bring this process in-house. Not only does this give them more control over the process overall (and the flexibility to make last-minute changes), but it also allows them to print on demand and have signs on the floor immediately.
An interesting angle to digitally printed signage is that it opens you up to new products beyond print in general, too. In addition to wide-format printers, you can bring digital displays into the fold, blending the best technologies to help customers get the most out of their signage investments. Output from wide-format AND digital displays (and the software and/or services to manage them) can help customers achieve their goals, while equipping dealers with access to yet ANOTHER growth area.
Direct to garment
The direct to garment (DTG) market is showing a lot of promising growth potential. According to Keypoint Intelligence’s Global DTG Forecast (2020-2025), the DTG market is expected to grow to $16.3 billion by 2025.
The critical advantage of DTG technology is that it eliminates opportunity cost (or missed opportunity cost), as businesses can print what they need when they need it without having to pay extra for output that will likely go unsold. Businesses can print on demand as orders come in, so they don’t have to manage any inventory, dedicate space for storage, or take losses on unsold merchandise.
Without the need for economies of scale to output product, the fashion industry can also increase the number of seasons they offer throughout the year. Why have one summer line when you can have multiple lines? Since the manufacturers no longer have to worry about wasted inventory, they can release new apparel as quickly as they can design it.
Small runs can serve both ends of the market. With high fashion, limited runs can help create a sense of exclusivity and prestige. This can extend to streetwear, which grew from the hip hop fashion of New York and the surf culture of California. Do-it-yourself aesthetics morphed into niche designers of graphic tees, sneakers and jeans, and to high-end designers like Gucci and Balenciaga producing extremely limited releases of highly sought-after streetwear.
Another area where DTG proves its value is in the “fast fashion” arena — this trend allows designers to take ideas from the runway, celebrity culture and the streets and turn around new, inexpensive product at breakneck speed. Trendy and inexpensive are the two defining factors of fast fashion – it’s clothing meant for the short-term. It’s about items that are easily affordable that can be purchased on impulse. Shoppers are encouraged to keep up with the changing trends and update their wardrobes often.
DTG also provides businesses with the agility they need to provide customization options, which are very much in demand. According to Credence Research, demand for custom printing will continue to grow, and T-shirts — which make up 54% of those sales — are driving demand. With DTG in their arsenal, your customers can get a piece of that growth. A lot of this is made possible thanks to web-to-print and workflow automation software that enables PSPs to take and create orders instantly.
Print isn’t dead, it’s not dying, and it will never die entirely. But it will definitely look a lot different in the not-so-distant future. Office pages — the traditional bread and butter — are down, and they’re unlikely to recover to pre-pandemic levels.
But there is a great opportunity in production print. There are several segments — digital packaging, wide-format, and direct to garment — within the digital production print industry that are forecasting (and experiencing) huge growth spurts. Seizing these opportunities can help you cross sell into your existing base and grow into new accounts. But most importantly, it provides you with a new, viable revenue stream and a stable platform for your business to grow on.
The lower cost of ownership also means that businesses don’t have to wait as long for their prints, and they gain a lot more control over the entire process. When you handle production print in-house, you don’t have to forfeit extra time to submit the job or for the output to be delivered before it can be used. You can spend those extra hours refining your design or looking for errors. And should something come up last minute, you don’t have to worry, since it’s being handled in house. The last minute is when you hit submit at the printer, not when you submit the job to your outsourced print service provider.
Frank Mallozzi is Chief Revenue Officer at EFI, a world leader in customer-focused digital printing innovation. Frank is focused on driving company strategy to speed the advancement of markets through its vast portfolio of best-in-class products.