Envelope Industry Hopes for Improved Marketplace

Envelope manufacturers place focus on service to improve customer and distributor experience.

According to Steve Brocker, vice president of sales and marketing at Western States Envelope and Label, Butler, Wis., the envelope industry is evolving from being product-focused to being more service-oriented. "We want to give customers the buying experience they want, as well as be an information resource for distributors," he said.

Consistent with the growing emphasis on service, Ron Pollock, associate marketing development manager at Wisco (a Quality Park brand), Tullahoma, Tenn., said that the company's delivery times have been shortened. "A number of our printed items are now available within 48 hours, and some custom items are available within six working days," he said. He added that the company's return and allowance rate is now less than 1 percent. "Our motto is simple—do the product right the first time, and ship it on time or sooner."

While manufacturers continue to focus on better service, they said that product quality remains just as vital. Brocker said that the overall quality of envelope products is better than 15 years ago. "Servo-motor and computer-controlled folding equipment not only run faster, but they also produce a better, more consistent product," he said.

He added that printing quality has also improved. "Flexographic print quality is much better now because of technological and plate material improvements," he said. "We have also seen an increase in requests for customized and value-added products using a wider variety of paper stocks and multiple windows."

Brocker said that Western States Envelope and Label manufactures three grades of machine-insertable announcement envelopes that are generally used in direct mail when end-users want an "invitation look." "The machine insertability of these envelopes saves the mailer money by eliminating the hand work usually required with envelopes that are used for announcements," he said.

Pollock said that Wisco manufactures commercial, catalog/booklet, expansion and remittance envelopes. "Commercial envelopes generate the most sales for us because they fit everyday needs for business and private consumers," he said.

Inside the Industry

Envelopes cannot be adequately discussed without mentioning direct mail. Brocker said that legislation—such as the National Do Not Call Registry and the Can-Spam Act of 2003—has positively affected the envelope industry. "The National Do Not Call Registry and anti-spam legislation have helped funnel advertising dollars into direct mail, which is still considered to be the best way to reach a targeted audience," he pointed out. "The United States Postal Service [USPS] is predicting a double-digit increase in direct mail units this year, which bodes well for the envelope industry."

However, Pollock said that with increases in automation, such as e-mail and online transacting, the envelope industry has taken a hit. "Electronic solutions have a negative impact on the industry because fewer envelopes are being used for invoicing and correspondence," he said.

Brocker agreed, but said that the effects of automation have been minimal. "Although electronic processing of transactions grows each year, and transactional envelope usage continues to decline," he said, "the decline is very gradual in the overall economy." He added that new companies are transacting by mail, and established companies are enhancing transactional mail with direct mail inserts.

When asked how increased postal and paper rates have affected the envelope industry, Pollock said that the adverse effects of price hikes are usually temporary. "The negative effects usually last for a few months, and volume gradually returns to previous levels and eventually higher," he said.

Brocker said that increased postal and paper rates affect the industry in different ways. "Postal rates, which will go up in early 2006, tend to affect the direct mail budgets of marketers," he explained. "Since postage is usually the most significant cost in a direct mail campaign, a large rate increase reduces units in order for the budget to be maintained."

On the other hand, he said, paper increases affect internal costs. "Upward price movement has been almost nonexistent in the envelope industry for the last four years because of excess capacity and stable paper prices," he said. "When a price increase occurs, it usually follows multiple paper price increases."

He added that most envelope manufacturers are committed to remaining cost-effective. "Envelope manufacturers are motivated to keep prices down, if possible, in order to fill capacity and, more importantly, to not drive more transactional mail to an electronic alternative."

Industry Trends

"Trends in the envelope industry today involve adding value to products and fulfilling specific customer needs," Brocker noted. "When recycled products came on the market 15 years ago, there was a buzz, but consumers expected the products to cost less, not more." He added, "There is a resurgence in recycled products today, and many Fortune 1,000 companies are engaging in corporate social responsibility initiatives that include environmental practices."

Brocker said that Western States Envelope and Label now has several product groups made from recycled paper, including a 100 percent post-consumer paper line called Globe 100.

Behind the Scenes

Pollock said that there are a number of challenges inherent in manufacturing envelopes. "Challenges that Wisco faces involve developing high-speed, cost-effective equipment while continuing to make it convenient for our customers to do business with us," he said.

Brocker pointed out that obstacles for envelope manufacturers are not unique to the envelope industry. "Lean manufacturing has its roots in the automobile industry, but its goals of reducing set-up times and eliminating waste have served Western States well," he said. "The notion of getting more out of what you already have ultimately benefits the customer."

Brocker and Pollock offered distributors useful advice for selling envelopes. Brocker said that distributors should educate themselves on the products. "One example is knowing whether a job can be run flexo or litho," he said. "Besides lower costs, flexo printing technology is improving every year."

Furthermore, he suggested that distributors explore marketing departments for envelope orders. "Often, the criteria used in marketing for selecting an envelope source is very different from a company's purchasing department," he explained. "Working with an envelope company that has a proven track record is also a valuable key to success."

Pollock advised distributors to aim to provide customers with unmatched service. "Distributors should focus on expediting orders and upgrading their customers from one-color envelopes to those printed in up to four colors," he said.

While both Brocker and Pollock agreed that the envelope industry is strong going forward, Brocker said that postal reform legislation is crucial to the industry's continued success. "If the postal reform legislation that is currently before Congress passes this year, the envelope industry and the entire direct mail industry will benefit by allowing the USPS to operate more competitively in the marketplace," he concluded.

By Cynthia T. Graham