Brokers: happy trio or doomed love triangle?
Thursday, May 12, 2011
Print management companies can add value to the buyer-printer relationship but are often a third wheel
A broker is a party that arranges transactions between a buyer and a seller. An agent acts on behalf of a specific service.
Many of the printers who closed down over the past decade saw their owner become brokers. It is estimated that there are about 12,000 in the US, some acting as brokers for printing firms in Canada, Mexico, and Central America.
Theoretically, brokers have no equipment. They can choose any printing service that has the right equipment and open production time. In most cases, the customer pays the broker and the broker (hopefully) pays the printer.
In the last few years, new kinds of brokers have arisen. InnerWorkings, a Chicago-based print buying service, claims savings of 10% or more for clients. Their philosophy is that there are printers with excess capacity who will sell print at a discount. Although the savings may come from not paying a salesman’s commission, the print buying firm, the broker, must get some share. In any case, the printer must sell their services at some discount in order to give the ultimate customer a discount and the broker a profit.
Printers themselves are brokers. Printers without process colour printing capability have long purchased printing from trade printers or gang printers. Small printers have always bought invitations, business cards and holiday cards from specialised services. There are brokers in every segment of the printing industry, including packaging.
The advent of online retailing has seen simpler products shift over to a web-to-print model. Now some of them are inviting others to re-sell their services (based on a 25% discount) to "friends, family, and customers".
If you count all of the printing in the US acquired through a broker relationship, it is about 13% of the industry’s entire revenue.
There are hundreds of lawsuits every year because the print job had some problem. For instance, contract proofs may have been signed off but a last-minute change was not supported by a new proof. Who is at fault when there are three parties to the relationship?
Because brokers call on the same potential customers as the printer’s sales reps, buyers see wide differences in pricing. And time is an issue: some clients expect to provide an RFQ in the morning and have the job completed that night. A broker may not be able to handle such a schedule.
The value today is all in the service and that service can be provided by any intermediary, whether independent or company representative. As printing companies accelerate the implementation of internet-based estimating, procurement, reprinting, proofing, and job monitoring, they will create new relationships with customers and potential customers.
However, print brokers will always be a part of the printing industry.
Frank Romano is professor emeritus at the Rochester Institute of Technology
This article appeared in the May 2011 issue of ProPrint.