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Wide Format Distribution

Sales and Distribution in the Wide Format Market.

By Steve Aranoff & Robert FitzPatrick

In the brave new world of wide format digital print, size, practicality, growth needs, and company personality all play an important part in determining an effective channel strategy. Like the offset print market before it, there is no single way that seems to work. No national third party dealer network has yet to be successful.

The successful distribution models now utilize local to regional dealers to accomplish sales and only sometimes installation, training, and support. There are some dedicated national chains, like Sign Warehouse and Charrette who profess to sell nationally. These companies do well with supplies and printers at the lowest end of the marketplace, but not yet with the printer companies discussed herein. As most know, one of the national graphic arts dealers, Pitman, has purchased Charrette and now seems more intent than ever to seriously enter the digital printing marketplace. The largest national dealer, Enovation Graphic Systems has a division dedicated to digital print, and has partnered with Mutoh, but otherwise does not seem to be very visible outside its own customer base.

With the above in mind, we took a look at the various distribution strategies of some of the printer manufacturer players after meeting a unique new dealer. The choice of companies discussed below is not meant to be all inclusive but to illustrate the varied approaches that are being taken and the characteristics of the wide format printing technology market that are relevant to channel structures.

Added Value Means Added Sales
After so many years in the printing industry, and having visited the traditional graphic arts distributor many times, we were astonished at what we saw at one of the distributors for Alcan, a leader in the development and sale of substrates for digital print.

First, the facility looked very much like a traditional warehouse. The requisite rows and rows of shelving filled with rolls of flexible material of virtually any size filled one room. Stacks and stacks of rigid boards of all kinds for print filled another room. The rigid board inventory made the warehouse look more like a lumber warehouse than anything seen at a graphic arts facility. But unlike a traditional distributorship, technology is a major cornerstone of this business.

Digital printers from Mimaki were humming in their combined demo and test facility. It didn’t make sense; for what possible reason was this consumable distributor so heavily involved in testing printed substrates? The answer was surprising, but quite understandable. Each of the manufacturers of material and each of the printers, when combined together, produced significantly different print results. This distributor, Sonoma Graphics, prided itself in its ability to understand substrates, and to participate in the development of unique coatings necessary to help get a customer’s customer the unique and satisfactory print images that they required. Then, using this expertise about how inks print, they could develop unique color profiles for every substrate they sell on the printers they sell. Besides using their consumable expertise to do a better job selling, installing, and supporting printer sales, they have achieved some other interesting things.

By doing a better job of making the printer accurate and useful for the customer out of the box, they are able to achieve a higher price than the competition. Having discussed this idea many times over the last five years in the traditional print world, to very little avail, it is really refreshing to see a similar type of distributor in a new industry really making hay with that concept.

The other interesting concept is that the sale of printers, which is made possible only due to their expertise in selling consumables, now helps them to find new customers for their consumable business. This makes eminent business sense, rather than just looking to add to their consumable sales to the same customer. Along with the sale of a $50,000+ printer, the company is now able, if they do their job well, to sell $500,000 worth of consumables. So, rather than believe that the sale of capital equipment can jeopardize their existing consumable business if problems should arise, here we have a company taking the expertise it gained in consumables and using it to seed the sale of additional consumable customers through the sale of capital equipment. This is quite different from what we have seen in the past.

Customer loyalty has also been significantly improved. They are seen as a trusted advisor, rather than just another box-mover distributor. While we were visiting, a customer called to seek their advice about what kind of router he should buy to best finish the substrates he was buying from Sonoma.

It was also interesting to see how they were making decisions about what kind of new products to add. They were actively discussing the wants and needs of their existing customers by asking, "what if Sonoma began selling certain types of products, would the customer be interested?," rather than using specific product specifications, to gauge interest in new products that they might sell. As a result, they are fully prepared to speak out of strength with suppliers, about what they believe they can achieve within their customer base.

This behavior by a consumable distributor is a refreshing difference from what we’ve been used to in the graphic arts arena. In that sector, we have seen the channel conflict model prevail in which the distributors and manufacturers struggle over account control. The manufacturers threaten termination or to authorize multiple distributors in order to control a region and drive sales. The distributors threaten to sell other brands in order to protect their customers or themselves. Lost in this model are mutual strategies to bolster sales and support mutual customers.

After learning about the success of the Mimaki and Sonoma relationship, it seemed interesting to take a look at what is going with other printer/dealer relationships in the wide format industry.

Tailoring Channel Strategies
Looking at channel strategies from the perspective of printer manufacturers, we encounter varied approaches but a consistent focus on tailoring distribution to customer needs. MacDermid ColorSpan, for example, has quietly slid into first place in selling UV flatbed printers. While there are now about a half dozen printer companies in the under $100K price point, MacDermid now has about 500 units installed in roughly two years, more than any other company during this time period. They started out selling, installing, and servicing through dealers, but today, only a hand full of dealers meet their criteria for the installation and training part. Since we have always wondered how a company could afford to sell products direct under $100K, this limited channel strategy seems like an interesting way to get the sales breadth of the dealer and his reduced costs compared to your own sales force, but not suffer the consequences of bad dealers. HP was probably the pioneer in this model, letting the dealer get commission for the sale, but making it easy for HP to carry the receivable and take responsibility for the installation.

Another printer manufacturer in this price range, Raster Printers, also started out with an indirect sales model. However, their printers had a relatively long maturing period—the time between product introduction and becoming a stable product that could be sold in volume. So, Raster, unlike MacDermid Colorspan, has taken over the total sales, installation, training, and service for their products in North America. They are promoting sales almost exclusively through tradeshows, advertising, telemarketing, and demonstrations, as opposed to the old fashioned method of calling on customers.

Durst has had similar problems in using third party sales agents even though their product is at the top end of the quality curve. About 18 months ago, they went to an indirect model using a National VAR with over a dozen sales reps to promote sales. Demos were still held at Durst headquarters in Rochester, NY. With an experience that wasn’t producing sufficient sales, Durst has now gone back to a direct sales model. Three senior Durst sales executives handle the major areas of the U.S., while they are looking to fill in with good dealers in other regions of the country.

Cutting systems manufacturer Gerber Scientific Products, primarily known for its Sabre Routers and the print and cut Gerber Edge, has always sold through distribution. Showing their new Solara flatbed UV digital printer for the first time at the ISA Expo in April, it is rumored they have already sold over 50 printers to their customer base—through their existing dealer channel. What makes Gerber different, we suggest, is a rigorous testing program to ensure that their products are easy to install, reliable, and maintainable within this distributed sales and support model.

Looking to find ways to grow faster than their current direct sales model will allow, VUTEk by EFI has taken a road similar to Durst’s, but with a different split. In niche printing markets, EFI has begun to find dealers for sales of VUTEk printers. For example, they have chosen a distributor in the museum quality art reproduction market to bundle their roll-fed printers with the special canvasses and inks required for such reproductions.

Based upon the experiences to date of the companies mentioned, tailoring a national sales model is still hard to do and must be carefully crafted for the manufacturer to be successful. Yet, we do see a number of manufacturers successfully crafting different business models to be successful and to provide good sales and support for their unique products. For the printer buyer, the old caveat still is as true as ever, "let the buyer beware." We still hear many war stories about some dealers abandoning the customer the moment the check has cleared, requiring customers to find third party companies to come in and help them calibrate color, integrate RIPs, and otherwise make the printers work productively.

Dec2006, Digital Output

 
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