From gift cards to door hangers, printed plastic products are steadily replacing their paper-made counterparts, and in turn, multiplying industry profits.
Just as the coveted department store gift card and the ever-present 60-minute pre-paid phone card have made a name for themselves, plastic cards and products are also taking on an increasingly dominant role in today's business practices.
Arthur Blank & Co., a Boston-based supplier of private-label plastic cards, produces a variety of cards, including gift cards, membership and identification cards, access control cards and loyalty program cards.
While color and design are usually the first attributes that capture customers' attention, there is more to a plastic card than color, noted Eric Domschine, marketing services manager for Arthur Blank & Co.
"These projects generally go through two separate companies—the actual producers of the gift cards and a systems integrator," he explained. "Systems integrators are companies that set up the hardware and software for the gift card. They tailor the program to fit retailers' needs," he added.
Of all of Arthur Blank & Co.'s products, Domschine said that gift card sales are dominant. "Gift cards generate most of our sales. They are used by many retailers, with industry analysts projecting that 60 percent of retailers will convert from paper to plastic by 2005," he commented.
On the contrary, Brian Grimes, sales manager for Plastic Graphic Company, based in Wauconda, Ill., said that while plastic cards are a large part of the company's sales, non-plastic card items generate more profit. "Our non-plastic card items, such as gauges and templates, tend to generate more profit because there is less competition for them in the market," he said.
Both agreed, however, that overall printed plastic products have proven to garner high profits for distributors.
According to Domschine, an ACNeilson survey showed that 64 percent of American households said that loyalty programs were important factors in their shopping decisions, and that "half of all adults carry up to three plastic cards—10 or more when household incomes exceed $100,000."
"Printed plastic cards are very profitable," noted Domschine. "If a distributor is already selling an account and hears of a printed card program, he or she should jump all over it. Distributor mark-ups vary from 10 percent to 50 percent depending on the order amount," he said.
Grimes agreed, "Plastic products are very profitable for distributors because not many people have the ability to sell them. There is not a lot of competition out there, so distributors should take advantage of this lucrative niche market."
The Gift Card Revolution
Manufacturers also agreed that the switch from store-issued gift certificates to gift cards has positively impacted the industry in a number of ways. "Gift cards are far superior to gift certificates. They are versatile and effective tools for supporting a company's marketing efforts," said Domschine. "By replacing paper gift certificates, gift cards reduce production and transaction processing costs and speed up distribution," he stated.
"The switch to gift cards has dramatically affected the industry because companies that used to print on paper are now doing business with plastic printers. This change has significantly increased our revenue," said Grimes.
Domschine also noted that gift cards and merchandise return cards can be issued in lieu of cash refunds—a tactic that helps support company branding efforts and keeps refundable dollars in the store. "Gift cards support branding efforts by literally inserting a brand into a customer's hand and wallet. This positions the company at the top of the customer's mind," he said.
In light of the evident pros found in selling plastic products, there are an equal number of cons intrinsic in manufacturing them. "The seasonality of the items is sometimes problematic," explained Grimes. "More people tend to buy gift cards only during the holiday season, rather than throughout the year. This makes the fourth and first quarters very high selling seasons and the second and third quarters lower selling seasons," he added.
Domschine said that technology and maintenance costs have proven to be staggering at times. "High capitalization costs to keep the plant running efficiently and on-going up-charges to have the best equipment are problems that we encounter on a daily basis," he said.
Despite manufacturing costs, Arthur Blank & Co. has increased its product offerings by adding the new RAC card to its roster. The card reduces production time and ensures the numerical integrity of account numbers within the run.
Domschine explained, "What makes this card unique is that it is the equivalent of two cards that can snap apart into a gift card and an instruction card. We also offer a long RAC card, which is the equivalent of three cards. It breaks off into a standard gift card and leaves 41⁄2˝ for instructions," he said. "Retailers like the RAC because it takes up less room than the bulkier cardboard-packaged cards, and there is nothing to dismantle."
Responding to the industry's rise in plastic card printing, Plastic Graphic recently implemented the Spartanics M930 Card Inspection System. The machine is the first card inspection system that produces single-pass, total card inspection. "The Spartanics machine does the work of 10 people and has allowed us to provide a more consistent card," said Grimes.
New Markets, New Money
Due to continuous technological enhancements and non-visible security features, plastic cards create an important opportunity for distributors to gain value-added sales. With this in mind, suppliers offered distributors some helpful selling hints.
"Distributors should remember that their clients are not coming to them just for a plastic card, but that they are coming for peace of mind—the peace of mind that comes from placing orders with a company that ensures quality," advised Domschine.
Grimes also said that distributors should always have samples of the products they're being asked to quote on to show customers. "Sometimes, what customers ask distributors to quote on and what they are really buying is quite different," he said.
Grimes and Domschine are optimistic about the future of printed plastic products. Domschine said that Arthur Blank & Co. projects an annual growth of 10 percent to 15 percent over the next three years, and Grimes said that Plastic Graphic will see consistent double-digit increases in the coming years.
By Cynthia T. Graham
- Companies:
- Plastic Graphic Company
- Plastic Products
- Places:
- Boston