EFI/PostNet Deal: The Inside Scope
Plus: Market Perspectives from EFI and PostNet
By: Cary Sherburne
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Marc Olin |
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Brian Spindel |
May 8th, 2008 - EFI recently announced a deal with franchisor PostNet that will make its Digital Storefront e-commerce and web-to-print solution available to PostNet franchisees. EFI’s Digital Storefront is also in use at office products superstore Staples, and, according to EFI, has been deployed in 2,500 total locations worldwide, making it one of the most widely deployed web-to-print solutions.
Web-to-print is one of the fastest growing value-added services in the printing industry, bringing the benefits of both increased customer convenience and improved producer productivity when properly deployed. Recent InfoTrends research reflects that Web-enabled services have entered the mainstream among the print service provider community in the United States. Nearly 50% of providers offer Web-to-print services today, according to the firm, with 32% planning to add them within 24 months. This would bring penetration rates to 82% in two years’ time.
WhatTheyThink spoke with Marc Olin, Senior Vice President and General Manager of EFI’s APPS business, and Brian Spindel, President & Chief Operating Officer of Colorado-based PostNet, to gain additional insight into the deal and an overall market perspective.
WTT: Gentlemen, thanks for speaking with us today. Let’s start with Brian. Can you tell us a little about PostNet? You are relatively new to the scene compared to many of the other franchise organizations, and our readers may not be that familiar with you.
BS: We started with a pack and ship model and began franchising in 1993. After about 10 years and undergoing a strategic planning process, we decided to diversify heavily into digital document services in addition to pack and ship. We believed that would be a good hybrid model that could continue to serve our consumer base, but that could also make our stores a great place for businesses to get digital printing and finishing services, etc. Our locations are near small businesses, and often in neighborhoods with easy access for small offices and home offices. In the last five years, we have deployed a new store design, and there are a number of new pieces of equipment incorporated into our standard store program. That includes new vendors and training, and of course, new technology. That is where EFI comes in. The EFI solution will be available to 450 stores in the United States, and we also have a new group in Canada that is growing fairly quickly, which will be implementing the solution as well. By later this year, we should have deployed Digital Storefront in close to 500 locations in North America.
WTT: What does a typical new store design consist of?
BS: We have a mix of packing, shipping and mailing, and digital duplication services. On the digital duplication side, stores have Xerox or Konica Minolta digital equipment connected to computers up front that both staff and customers can use for direct digital output. We also offer a number of binding options, and stores have business card slitters, a padding press, folding equipment, and a paper cutter. That means that most of the business cards, postcards, business forms, flyers and sell sheets are produced right in the store digitally. They can be done in short or long runs and with very quick turnaround times.
WTT: What do you see as your competitive advantage in what is a somewhat crowded market space?
BS: Our benefit over corporate-owned chain stores is that our locations are franchisee owner operated. We think our franchisees can out-execute when it comes to customer service and consultation on complex or interesting jobs. It is a crowded market, but there is huge demand. In any area where there is vast opportunity, there will always be a lot of competition. We are a fairly young company in an established market, and our stores have newer technology, and faster and more powerful computing capabilities. There is a benefit to coming in later to an established market.
WTT: Marc, can you talk to us about how this deal originated?
MO: It is an interesting story. PostNet came to us looking for a more efficient way to do document submission from their client base. Initially, they were looking for a very simple solution that just submitted documents and nothing else, to replace an existing FTP solution. We told them we could certainly do that, but we would rather provide an environment that gives the franchisees an opportunity to grow into a full-fledged storefront solution. We put together a unique deal that gives all franchisees access to an entry level offering with Digital Storefront; and when they are ready, they can progress to full Digital Storefront capability, even adding variable data printing to the solution set. It was a win/win approach. It met the needs for all franchisees to have an entry level offering, but as needs grew, franchisees would not need to change platforms. And at the same time, EFI can enjoy additional activity from their locations while they enjoy the additional capabilities of the software.
BS: As Marc indicates, we did set out to make it easier for our customers to get their digital work to us. That was the initial goal. We currently have FTP, and while it is good technology, it does require customers to go through a number of steps to get us their file. We wanted something that would live within native applications and would deliver us a print-ready PDF—basically, a Send-to-PostNet driver. We knew EFI had developed this in its Print Messenger solution, and they were on our list of people to talk to. Quite frankly, once we started talking to them and understood the depth of not only Print Messenger, but how it integrated with e-commerce, we were really excited about the opportunities. Add to that the fact that our stores use EFI Fiery to connect to their output devices, and the ability to have all of that compatibility from a single partner just made too much sense to ignore. We are tickled that we started out looking for something simple and ended up with a whole range of technology that does much more than we initially set out to do.
WTT: How do you expect the deployment process to go? In most franchise operations, there are varying levels of digital knowledge, aptitude and expertise.
BS: Within any organization, there always are first movers when it comes to technology. We have a very engaged and involved group of franchisees. Those most interested in technology serve on a technology committee, and there are a subset of those that are particularly excited about e-commerce and the EFI solution. They will help us with implementation and setup. When you involve franchisees in the process, it results in a higher level of involvement throughout the organization and faster adoption rates. Some, of course, will likely take a wait-and-see approach. We anticipate a good initial launch, but the full impact will take a few years to be fully realized.
WTT: Marc referenced the ability for your franchisees to move into variable data. That typically tends to be a little more complicated. What do you expect on that front? Are some of your franchisees ready to implement that today?
BS: Yes, absolutely. We already have franchisees that are very much involved in doing variable data printing for customers, because we have the Fiery tools in place. This gives the customer the opportunity to catalog various things, like a postcard they send out every quarter, so that they can more easily update and reorder each time. We will have stores using the XMPie product that is integrated into Digital Storefront right away. We just held our 15th annual convention about a week and a half ago where we announced this partnership, and there is a lot of buzz and excitement out there. I can’t wait to get it working out in the field and start realizing the benefits for our franchisees and their customers.
WTT: Marc, is PostNet’s solution hosted by EFI, individual stores, or by the PostNet franchisor?
MO: It is hosted by EFI for all locations.
WTT: For an installation this large, what does a typical deployment look like? How do you manage training, installation, etc?
MO: It is actually pretty straightforward. We are doing some core training for the central group at the franchisor, but they will handle the deployment to their stores. Especially for the entry level system they will be deploying, the process is very straightforward. There is really not much of a learning curve for the franchisees. The central group will set everything up for them so all stores will be activated and ready to work.
WTT: The press release indicates that files can flow from Digital Storefront to the appropriate print engine with little human intervention. Tell us a little about how that works.
MO: The integration between Digital Storefront and Fiery is based on the job ticketing information we capture inside of Digital Storefront. This includes things like simplex/duplex, number of copies, and finishing options. This data is pushed to the Fiery in the job ticket and automatically sent to the target output device when the user selects the print option inside of Digital Storefront. Fiery also sends notification back to the web site when the job is completed.
WTT: What about preflight, to ensure that print-ready PDF that Brian spoke about?
MO: Digital Storefront today is not focused on preflight. Because print is initiated from within the end user’s application where all of the fonts and resources are available, and Digital Storefront can do the distilling with the Print Messenger driver we are distilling the file to the requirements of the producer. Most end users in this type of environment are not print people. They just know they want their document printed. So giving them a preflight report that talks about resolution or color information will just confuse them. We feel it is better to let the preflight happen as part of the production process and the people at the facility who are experts can resolve any problems that might occur. After all, the best way to avoid problems in the first place is to distill the file on the local machine where you know that you have all the fonts and resources available and the proper settings in the distiller. With this approach, if they can print it locally, they can process it with Print Messenger and a print-ready PDF will be generated.
WTT: Staples also rolled out Digital Storefront to all of its stores. Can you give us an update on that installation?
MO: They continue to use the site and to add capabilities to their deployment. For example, they have upgraded to Digital Storefront 3.0 and have added wide format capabilities within the web site. We have a number of other projects ongoing with them to continue to add additional capability to their environment. Staples is using Digital Storefront in all 1,400 U.S. stores. We believe it is the largest non-customer-hosted web site deployment for printing in the world.
WTT: Recent InfoTrends research indicates that about 15% of print jobs are now arriving via web-to-print solutions, up from 5% in 2000. Respondents to their survey were pretty aggressive in terms of projecting future growth, expecting to see about 50% of jobs arriving via web-to-print in the next few years. Based on what you are seeing in the marketplace, do you have any comment on those projections?
MO: I definitely think those numbers are achievable, especially in the digital print segment of the market. Because offset still represents such a huge dollar volume, I am not sure what percentage of the total dollar volume that will represent for the overall market.
WTT: What advice do you have for printers, especially smaller organizations who may feel that they cannot afford to implement web-to-print?
MO: The natural question would be, “Can you afford not to implement web-to-print given that all of the competition is doing it today and customers are always looking for quicker-cheaper-easier than what they do today.” The quicker and easier parts can be facilitated by web-to-print. If you don’t have a web-to-print solution, clients will find a quicker, easier alternative to you and go with it.
WTT: Anything else you would like to add before we close?
MO: One of the interesting, and frankly shocking, things we have seen in our existing Digital Storefront client base is that the average dollar value of digital jobs submitted electronically is dramatically higher than anyone thought it would be. It appears that when people are on the web site and they see the various options they can have in a WYSIWYG manner, they are more likely to spend, say, an extra $10 for spiral binding and clear vinyl covers for their PowerPoint presentation. This is high margin activity that they may not be as likely to add when they walk into the retail environment. Even though the customer service agent may suggest it, the customer is not actually seeing what the finished document would look like, and it is easier to just say no. We believe that is what is driving the dollar values up. When you have these options presented graphically and you can see them in real time, it drives additional activity that otherwise might not happen, certainly not with FTP, and often not even in the store. Job values are higher almost by a factor of two over what most people projected, across the entire spectrum of web-to-print activity.
Cary Sherburne is available for speaking engagements and consulting projects. To get more information contact us here.
Please offer your feedback to Cary. She can be reached at cary@whattheythink.com.
Prior to launching her consulting practice, Ms. Cary Sherburne was the Vice President of Marketing Communications and Outsourcing Solutions at IKON Office Solutions. In that capacity, she developed and implemented a branding campaign to build brand awareness for IKON in the marketplace as well as enhance employee pride in the organization, and was responsible for all internal and external communications, including trade shows and events, corporate newsletters, and industry and press relations. In the outsourcing role, she set strategic objectives and priorities for IKON's product and services portfolio in its Outsourcing businesses, including development of programs and sales support materials for that environment.
Sherburne was a Director at CAP Ventures, an internationally known firm specializing in market research and strategic consulting for the digital document and print on demand industry, before joining IKON, where she launched and managed the company's Document Outsourcing Consulting Service.
Her tenure in the printing and publishing industry has also included sales and marketing positions at Xerox Corporation, Indigo America and Bitstream. She is a frequent speaker at industry events and a recognized author.
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