HelloPrint: 'most suppliers supporting survival plan'
Thursday, May 21, 2020
HelloPrint has asked its print suppliers to accept deferred or reduced payments as the fast-growing print platform battles to stay afloat and secure fresh investment after a massive drop in sales of up to 80%.
The Netherlands-headquartered print aggregator does not have any production facilities of its own. Instead, it works with a network of print suppliers across Europe, where it is active in eight countries.
The Netherlands is its biggest market, while the UK and France are the fastest-growing.
Printweek has learned that the company has asked suppliers to support it by either accepting a percentage – understood to be less than 50% – of what they’re currently owed, or a deferred payment of the total amount owed plus interest, to be paid over five years.
HelloPrint co-founder and CEO Hans Scheffer told Printweek that the Covid-19 pandemic had resulted in a dramatic drop-off in business, with much of its usual volumes being linked to promotions and leisure activities that have been curtailed during lockdown across Europe.
“From the second week of March we saw severe impact on our revenues, particularly in the southern countries, in Italy and Spain, and later on in the more Nordic countries, we saw a big, big decline in revenues of up to 80%,” he said.
“Almost no company can survive that for a sustained period of time. We started to think how can we survive this crisis? Without taking strong measures, there is no future.”
He said the firm, which had been on a run rate to achieve sales of €65m (£58.4m) prior to the pandemic, had also come up with a plan to attract new financing.
“But that plan can’t survive without asking our partners if they are also willing to contribute. That’s the reason we have offered our partners a payment plan. One of the options is that we pay the full amount, with interest, over a couple of years.
“That’s the most honest and realistic plan we could come up with,” Scheffer added.
Printweek understands that creditors are currently owed around €8m.
He said the business “could have gone for the easy way out” but wanted to try and find “the most honest and open solution possible”.
Print suppliers are watching anxiously, with some fearing the potential knock-on impact.
A source close to the situation commented: “This could put some companies in real difficulty, and there could be a domino effect. Basically they are screwing their suppliers and demonstrating how ruthless they are. They are weakening competitors by strengthening their own position.”
However, Scheffer said the firm was doing “everything possible” to solve the situation.
“Right from the very early start of this, [we] have been in contact with all of our partners across Europe, and we try to manage their problems as good as we could.
“We are a growth company, financed by cashflow, and if cashflow decreases by the amounts that it has decreased, you cannot survive it as a growth company.”
The company works with 300 print and merchandise partners, and 200 logistics suppliers.
Scheffer also said that HelloPrint was accessing government support programmes where possible.
“We have applied for all the various measures across Europe. We try to use the measures of the governments as quickly as we can to survive, and that’s part of this solution.”
He said that he, his co-founder and HelloPrint investors had “not taken a single euro” in dividends, and had consistently reinvested in the business.
“It’s very important to say, we as entrepreneurs and investors are doing everything we can at an investor level to solve this. We are only doing this to survive the crisis and have the possibility to pay all our partners.”
Existing private equity investors are putting in an undisclosed amount of new money, while a new financing facility is expected to be in place in the next two weeks, Scheffer said.
“After that we can hopefully pay everyone their fair share.”
He said that all of the firm’s creditors – including Google where HelloPrint has been a big spender – were being asked to accept reduced or deferred payment.
“Everyone is taking a hit. We’re not only asking our suppliers, it’s everyone who’s involved in our company – our investors, our management everyone is taking their fair share of this. You can only do this if you do this together. That’s the most fair and reasonable thing we have proposed – it’s important to say that right from the start we have been in contact with all of them individually, and that’s still happening on a daily basis, to see if we can find the right solution for everyone.
“At the end, it’s a collective thing that you do together. As CEO I feel responsible and I am doing everything in my powers to safeguard the company and also our partners.”
Scheffer also said that it was not practical to simply mothball the business and ride out the crisis.
“It’s not possible to shutter it because we have all sorts of recurring costs that are running,” he said.
The firm has around 190 employees, with many currently furloughed.
Scheffer and co-founder Rene van Dijk set up HelloPrint in 2013.
The company claims that its platform offers “the largest print and merchandise catalogue in the world” with more than 10m product combinations. Via its API partner firms can create their own e-commerce storefronts.
Prior to the virus crisis, HelloPrint had over 680,000 customers, and generated more than 500,000 orders per year.
Before setting up HelloPrint, Scheffer founded Flyerzone and Drukland before selling them to Grafenia company Printing.com.
One of HelloPrint's private equity investors also has a stake in Onlineprinters, the owner of Solopress.