Labels remain a dependable source of income for small distributorships.
For the smaller distributor, labels have found their niche in providing a dependable—and often lucrative—source of income.
"Labels have been a part of our product mix since the company's inception in 1983," said Michael Gordon, president of Commercial Business Forms, Cedar Knolls, N.J. "At that time, however, labels didn't play a significant role in the business because business forms dominated the market," he explained. "Now, about 25 percent of our business is centered on labels and tag materials that are adhesive-based."
Veteran distributor Murray & Heister, Beltsville, Md., has been selling labels for 25 years, with the product accounting for 5 percent to 10 percent of the company's overall sales. "We have found labels to be a very lucrative product," said Michael Boyle, chairman. "We sell all types of labels, including singles, rolls, continuous, full-color, one-color, vinyl and paper, with a wide variety of adhesives," he said.
While Gordon acknowledges that labels are profitable products by themselves, he prefers to look at the bigger picture. "At Commercial Business Forms, we prefer to think of the overall profitability of all of our products, as opposed to one being more profitable than the others," he explained. "But, our label sales have shown double-digit increases over the last two years, resulting in 12 percent to 15 percent increases each year."
Distributors agreed that labels typically do well on their own, and using them as add-ons to larger orders does not tend to increase sales.
Said Gordon, "We do a lot of label and form combinations, but adding a label to an order does not necessarily sell the product. The sale has more to do with the overall design of a system that works well for the client."
The Latest in Labels
From an industry-wide perspective, distributors say that technology has proven to be profitable in the label business. "Label sales seem to be increasing annually," said Boyle. "With the newer technology that is available today, producing custom labels has become much more cost-effective." He said that laser technology minimizes the high cost of dies.
Gordon said that labels play an important role in the array of printed products that distributors sell. "Labels have become an integral part of the selling process because they can easily transport information from one point to another without the use of a full sheet of paper," he explained.
The Good, the Bad and The Unusual
Indeed, it is to be expected that selling labels comes with its own set of oddities. Gordon recalled an unusual sale that his company encountered. "We have a large retailer that ships expensive, high-ticket items to its stores and directly to consumers. Naturally, our client doesn't want UPS to leave these packages at the door if no one is there to sign for them," he explained.
Commercial Business Forms created a bright-yellow label for the packages to remind UPS workers not to leave them without first having someone sign for them. "This may seem like a simple application, but these labels have proven to be very effective in meeting the customer's needs and have resulted in ongoing orders," Gordon said.
Boyle said that Murray & Heister came upon an unusual set of circumstances when providing labels for a brick and block company. "The company needed labels to adhere to brick and block color samples, so an extremely aggressive adhesive was needed. We finally decided on a tire adhesive, which worked well for the client," he said.
Making the Sale
Distributors agreed that having strategic ways in which to sell labels is just as important as the product itself.
Gordon said that promoting labels as a communication device is an effective sales strategy. "It is important to treat the label as a vehicle for transmitting information efficiently. To us, a label is no more or less than a form, because it transmits information and instructions from one place to another," he said. "If used correctly, labels can be very effective communication tools."
Distributors said that advances in technology, such as the Internet, have not affected label sales. "I haven't seen any adverse effects on our sales as a result of the Internet," said Gordon. "In fact, stock items would probably do well on the Net because the costs associated with acquiring standard labels would be eliminated," he said.
Boyle agreed, "I am not aware of the Internet adversely affecting label sales. Rather, technology has tremendously improved the quality of flexo printing, in addition to thermal printing and custom laser applications."
Sticky Situations
Challenges abound in the world of selling labels. One of the most obvious, distributors said, is ensuring that the label adheres to the surface for which it was made. "Making sure that the label sticks is the biggest challenge that we face," admits Gordon. "Ensuring that we are matching the appropriate product with the customer's needs is our most unique challenge," he said.
Boyle said that factors such as surfaces, temperature and exposure to light play a large part in how well the label will adhere.
Teamwork
As the goal of any company is to achieve success through customer satisfaction, distributors were eager to provide their colleagues with helpful selling tips.
Said Gordon, "Distributors should be extremely careful to use the correct material and printing process when evaluating the type of label to supply clients with." He also said that distributors should fully understand how the client will use the label. "Customers perceive us as experts, so we should know what they are trying to achieve before designing a label and choosing adhesive materials," he advised.
Boyle stressed that distributors should ensure that customer service is at its best in order to retain customers. "There are nice profit margins in label sales, especially when it comes to custom labels. Clients are less inclined to shop around when they are happy with the product you are supplying," he said.
In turn, Gordon offered ways in which manufacturers could aid in the selling process. "Manufacturers need to be our thought process. They should fully understand the different types of substrates and guide us on correct printing processes," he said.
As a service to other distributors, Commercial Business Forms now stocks retail labels and price tags in its Elizabeth, N.J., warehouse. The labels are primarily made for small Cognitive Blaster printers. "A significant part of our business has started to move in this direction. The project has allowed us to become a supply source to the retail market, primarily through resellers," Gordon explained.
Looking ahead, distributors predicted a bright future for label sales.
"I firmly believe that the market is expanding and that there are significant opportunities that have not yet been explored," said Gordon.
"I'm no clairvoyant, but I am also counting on a steady incline in future label sales," Boyle concluded.
By Cynthia T. Graham
- Companies:
- Commercial Business Forms
- Places:
- Beltsville
- Cedar Knolls