Fortune will favour first-movers with a personal touch
Friday, April 5, 2013
At Ipex 2010, Canon staged one of the most innovative live demonstrations that the print show has ever seen. Visitors to the manufacturer's stand were invited to submit their name to a Canon representative and then later that day they could go back and pick up a fully personalised box of Lego bricks.
Since then, not much of note has happened in personalised digital packaging for the consumer market. Over the past two and a half years, you’ll struggle to find many real-world examples of personalised packs. But all that could be about to change. At last year’s Drupa, a number of B2 digital presses were unveiled that some industry experts believe are the final piece in the jigsaw for commercial printers to produce small-scale carton packaging on the same machine as they produce standard commercial print products.
The main opportunity for printers looking to expand into this area is what manufacturers call ‘gifting’ products – ultra-short runs (a handful or so) of carton products for the consumer and business gift market.
But just how big an opportunity is this and what are the main barriers to entry? At the moment, the printing industry is unified in its belief that there is a market for this type of product, but there’s uncertainty as to how big a market there is for short-run gift packaging.
Julian Marsh, commercial business development and photo products consultant at digital photo print and gift product provider Harrier LLC, is confident that there is a market for ultra-short-run packaging for the consumer market, but says "it is probably not very big".
Likewise, Christian Menegon, labels and packaging EMEA segment manager at HP, thinks the bigger opportunity is likely to be for runs of several hundreds of cartons rather than just a handful, largely because of the logistical obstacles facing end-users.
"Technically we can do it," he says. "And business-wise, brand owners are dreaming about this possibility because that one-to-one connection to the consumer, giving them exactly what they need, develops loyalty and relationships. They’re all dreaming about this whatever product they’re selling, but we’re missing something in the middle – the logistical part."
It’s a view subscribed to by Jon Harper Smith, marketing manager at Fujifilm. "People always say the supermarkets and retail outlets absolutely want personalised packaging, but what nobody has really addressed is the practicality of doing that. The issue is not the printing; it’s the managing of the process of getting the product with a personalised pack around it on to the supermarket shelf."
This is the conundrum facing Michael Todd, managing director at RCS. He purchased a B2 Truepress JetSX from Screen in November last year, to produce personalised packaging and although he’s had a lot of interest from brand owners, so far take-up has been fairly slow. "I’m convinced there must be a market for this, but it’s a chicken and egg thing," says Todd.
He’s already migrated short-run work from his battery of litho printers to keep the press ticking over, but for him the real opportunity with the Jet SX is not just to be a printer to his clients, but to act as a fulfilment house.
"Take wine, for example," says Todd. "A wine producer could offer customers the opportunity to buy a bottle of wine in a personalised box for someone’s birthday. For me to print the cartons and then send them to the wine producer for him to put the wine in and send out to the customer seems like a contorted route.
"Whereas if he sends me three or four cases of wine in advance we can get the order digitally fulfilled and despatched on the same day."
In addition to looking to partner with companies in established markets Todd is currently pursuing the idea of going direct to consumers and says that he’s spent a lot of time thinking about routes to market.
"I’m not keen to be solely reliant on the effectiveness of third parties to sell this for me so we are actively looking for direct routes to market," he reveals.
This is where he’s getting assistance from Screen’s go-to market manager Wim Koning. "I’m helping RCS get its service to market," says Koning. "We’ve already made some examples of fully personalised gift packaging that we’ve shown to brand owners and retailers and the feedback has been very positive."
Koning believes there is a huge potential market for personalised gift packaging, one that until the latest generation of digital machines came on stream, printers would not have been able to cater for because the technology was just not up to scratch.
"Printing personalised wine boxes on a digital machine was not possible until recently," says Koning. "If you printed them on 350gsm it wouldn’t be heavy enough to hold the box, but now on these new machines you can do it on 450 or 500gsm and suddenly you have something in your hand that feels really familiar, but has the wow factor because it’s fully personalised."
He anticipates that over the next few years we will see the emergence of a number of entrepreneurial Moonpig-type businesses that come along and make a name for themselves as experts serving this niche area. Personalised gift packs also present an opportunity for smaller FMCG brands to gain a foothold in a market through creating that all important point of difference in store, says Highcon’s vice-president of marketing Eitan Varon.
"The ability to produce cost-effective short runs without the delays normally incurred in analogue die-making is not only good for big brands and retail outlets: it provides a way for small, innovative companies to enter markets with the same quality of branding, enabling them to occupy shelf space with big brands and differentiate themselves with distinctive packaging," says Varon.
It all sounds great, but what do printers looking to go down this route need to be aware of? Todd advises that before even contemplating splurging on one of the new generation of B2 machines, business owners need to think through the route-to-market conundrum.
"I think in the past, and possibly even now, printers have sometimes been guilty of thinking ‘if we build it, they will come’ and I’m not certain that’s the case. Especially with a brand new product. You really need to have a clear idea about how you’re going to sell it," says Todd.
Printers also need to be aware that this isn’t just about investing in a new press. You’re going to need to splash out on other pieces of equipment to enable you to offer clients the finished article.
"The flexibility of printing that is given by these machines is great, but putting ink on a substrate does not make a box," says HP’s Menegon. "You still need finishing tools to convert the print into a box that can be used on a packaging line somewhere."
Investment in some kind of web-to-print solution will also help printers get around the route to market issue, says Fujifilm’s Harper Smith.
"If you’re looking at offering ultra-short-run packaging then you’ve got to think carefully about how you’re going to make that service available to potential end-users," he says. "You’re not going to be able to rely on passing trade. If you’ve got someone who is purchasing packaging already and has a specific requirement for something of this nature that’s a possible route to market, but it’s more likely that you’re going to have to invest in some sort of web-to-print or e-commerce storefront."
Clearly a significant level of investment is required by printers who want to try to take advantage of a market that at the moment is still in its infancy. It’s a major gamble, but Screen’s Koning likens the gifting market to another personalised print product that had an equally slow start.
"Exactly 10 years ago, I was involved in the first go-to market for photobooks," says Koning. "I remember at the very beginning that nobody really understood or saw the potential for the idea because it was a completely new product that nobody had ever seen before so it was hard to imagine how big it could get. Within that period of 10 years, photobooks have gone from nothing to a huge market. I think personalised gift packaging could go in the same direction."
Fortune favours the brave and for Harrier’s Marsh those willing to take the plunge could be the ones that ultimately reap the rewards.
"The cost of entry will be high so there is unlikely to be massive competition, initially meaning suppliers with first-mover advantage should see a decent return," explains Marsh. "I would expect this to become a fairly specialist niche – a bit like photo products – with a small number of firms making substantial investment and mopping up the bulk of the business."