Cimpress seeks advantages of scale
Tuesday, April 7, 2015
When Cimpress hit the acquisition trail again last month, buying European rivals Exaprint and Druck.at, some may have dismissed it as an attempt to accelerate its EU growth.
After all, the firm’s chief executive, Vistaprint founder Robert Keane, admitted to being “disappointed” in the region’s growth profile in 2013, shortly before Cimpress embarked on a spending spree that saw it buy five European web-to-print businesses in the space of 13 months at a combined cost of €280.3m (£205m).
In the same May 2013 interview, Keane told PrintWeek that he expected the group’s growth to be “primarily organic” before adding “never say never”.
As it turned out “never” came around in February 2014 with the acquisition of People & Print Group, followed later that year by Pixartprinting and Fotoknudsen and last month by Exagroup and Druck.at.
So what changed?
Following the acquisition of Pixartprinting in April last year, Keane revealed that the company’s strategy was to defend the 70% of its revenues that came from heavily discounted commodity print sales, while growing its sales to “higher expectation customers”.
“In the past two or three years we have made a choice to really move and improve the Vistaprint value proposition away from [discounted] everything to something that’s targeting those [higher expectation] microbusinesses,” he says.
So while the rush of acquisitions has clearly accelerated Cimpress’s European growth (EU revenue grew 11% in 2014 versus 8.9% in 2013) it was not the prime motivation. Rather, Keane has spoken repeatedly about “learning” from the firms Cimpress has acquired. On Pixartprinting, Keane said that Cimpress could “learn from Pixartprinting while gaining product breadth”, while for Druck.at he says that the rationale was to “learn from a company that has honed their competitive skills in the world’s most competitive print market”.
Keane adds: “All the big German players compete aggressively in Austria because it is closer to most of their production facilities than Berlin, Hamburg or Düsseldorf. Despite such fierce competition, Druck.at has been very successful.
“It has built its production systems around one-day production and delivery, and our platform team is very interested in bringing next-day capability to other markets.
“That is one of the biggest reasons we acquired Druck.at. They deliver to their customers in the Vienna region the next day, including both production and shipping time. As we got to know them we realised how incredibly valuable that service is to resellers and other graphic arts professionals who are usually operating under very tight deadlines.”
Meanwhile, Exagroup fulfils another requirement in giving the group “a vast range of products and post-press options that are many times deeper and broader than what Cimpress had before [and] empowers resellers to offer creative, differentiated marketing solutions to their end-customers”.
This highlights three of the core tenets of Cimpress’s acquisition strategy: access to new, higher expectation customers (typically via the reseller channel); access to a broader range of products and technical expertise; and a remorseless focus on customer service.
The group’s decision to maintain all of its acquisitions as independent brands highlights the fact that it now caters to a broader range of customers and that serving those customers, whoever they may be, better than anyone else remains at the heart of the company’s DNA.
“Cimpress will continue to have different brands, even within the same territories, because that strategy allows each brand to focus on the specific needs of a given type of customer and therefore be the most attractive to those specific customers,” explains Keane.
“For example, resellers are graphic arts professionals, so Pixartprinting and Exagroup spend nothing on DIY template software. Resellers are also highly sophisticated buyers who feel very comfortable doing research to compare various trade printers, so Pixartprinting and Exaprint spend very little on advertising.
“Even within similar target segments, such as resellers, there are other important differences between our brands. For instance, Pixartprinting leans more toward having the most competitive prices possible, whereas Exagroup is slightly more expensive so they can invest in a vast selection of creative options and the most professional levels of quality. Both are valid strategies, they just serve different customer needs.
“We want each of our brands to provide the best combination of product selection, quality, value and service, each addressing the needs and priorities expressed by their unique customer target.”
In the background, and to a degree informing these acquisitions is Cimpress’s Mass Customisation Platform (MCP), its major, multi-year investment in a software platform that can aggregate orders from across its growing portfolio of brands for production at any of its growing number of manufacturing facilities. This will allow Cimpress to get the best of both worlds in terms of bringing the benefits of enormous scale, honed at Vistaprint, to its other brands, while applying the lessons learned from them in terms of product range, quality and delivery speed across the group.
Where the current spate of European acquisitions will end is anyone’s guess and it is not yet clear whether this strategy will be replicated in North America or elsewhere in the world. For now Keane simply states that there was “no specific end goal in mind” but that there were “incontestable advantages to scale on the ‘back end’ in this business”. “To the extent we do make more acquisitions, Cimpress’ strategy will be to seek firms that fortify those cross-brand MCP advantages of cost, quality and delivery speed and dedicate themselves to serving a specific type of customer.”
Date Target Price
24 Oct 2011 Albumprinter €65m
19 Dec 2011 Webs.com $117.5m
18 Feb 2014 People & Print Group €24.5m
1 Apr 2014 Pixartprinting €127m
18 Jun 2014 Fotoknudsen €14m
2 Mar 2015 Exagroup €91.5m
18 Mar 2015 Druck.at €23.3m