Customized, value-added traditional products remain popular and profitable.
Continuous forms, unit sets, checks—not very exciting, are they? But, these traditional products—distributors' bread and butter a few decades back—have plenty of profitable life in them yet despite falling sales, said manufacturers.
"Sales may be flat to steady for traditional forms, but we notice sales overall are up," said Deanna Day, brand manager for forms products at PrintXcel, Fairhope, Ala. This is due to a changing product mix, Day said.
"Since 1995, we've seen a 15 percent shift from basic traditional products to specialty and value-added," she noted.
Becky Douthat, vice president of National Business Forms, Greenville, Tenn., gave this overview. "For unit sets, it's been a gradual decline. Checks are holding steady, and continuous forms, in volumes of 5,000 or less, have had growth. Longer-run continuous orders, especially 25,000 or more, have seen a steady decline," Douthat said.
She echoed Day's assessment that current sales and growth will come primarily from more specialized products. "Plain vanilla traditional product orders are down. You can only offset that with aggressive pricing," Douthat said. "But, for unit sets, for instance, we have a lot of unique bells and whistles—pattern perfs, jumbo numbers, transfer tape, etc. Those orders have been steady."
Mike Fleming, vice president of operations at Golden Business Forms, Golden City, Mo., tracked a decline of 5 percent to 7 percent in both unit sets and continuous forms during 2001 and 2002. "Then, in 2003, both products started to rebound," Fleming said. "With the economy growing, companies want to be separated from each other and not buy generic forms. Customization is the selling feature."
Customize to Compete
The message is clear—distributors need to emphasize custom features and processes to set otherwise ho-hum products apart, including the generic offerings at office superstores.
Checks, for instance, are still a moneymaker, especially with added security features, which manufacturers offer in abundance. Golden Business Forms' Thermocheck program offers stock laser checks "featuring the ultimate in security features," Fleming said. This includes security papers, warning bands, prismatic printing, void pantographs, micro-line border printing and heat-sensitive ink.
Said Day, "People have been talking about the demise of checks for a long time, and it hasn't happened—not in business. There's a $1.5 billion market in business-to-business checks with very little of that being sold by the Office Maxes of the world. The forms industry has the expertise in that market."
Customized invoices and statements can make a big difference in the perception end-users' customers have of the firm and serve as effective marketing tools, Douthat said. "Emphasize that those documents are all about the company, and they should want it to look nice and appealing," she added.
ATM and point-of-sale (POS) roll products also offer a chance for customization, Fleming pointed out. "Standard ATM product orders are down, but custom ATM and POS are up," he said. "Credit unions and banks use four-color, glitzy printing on the back of the roll to sell loan products, security features on checks, etc."
Affixed labels and cards, numbering and binding add value and more demand overall on traditional product orders, Day said. For instance, HIPAA (Health Insurance Portability and Accountability Act) forms "start out as a unit set and add a lot of labels," Day pointed out. "It's more profitable for the distributor, and the product fills a need for the customer."
Seeking and filling customers' needs is what ultimately sets the forms distributor apart from those who hawk products on price alone, manufacturers say. "Suggest that a form might work better with transfer tape on the back. Ask if it needs a perf, score or punch. Emphasize security when selling checks," suggested Douthat. Such creativity not only saves a sale, but also makes the customer's life easier and garners loyalty, she said.
In addition, distributors have the freedom to suggest non-standard-size forms if they will benefit the customer, she said. "If you sell a 5˝ form, very few people can manufacture it, so you cut down on your competition," Douthat said.
In addition to adding value, bundling products helps with sales of traditional products, Day said. "The end-user and distributor want it simple—go to one place and get it all. We bundle VersaSeal products—equipment, software, etc.—and do the same with a cut-sheet and envelope or tax form and envelope."
Such bundling extends to services such as warehousing and forms management, as well, even in the face of declining order volumes. Douthat said that National Business Forms has added a very short-run pack-to-pack operation for continuous orders of 1,000 to 5,000 to offset declines in larger volumes and will soon add a sheet-fed press for short-run cut-sheets, which customers are demanding.
National Business Forms averages runs of 10,000 to 25,000 in unit sets. "Longer is few and far between," Douthat said. Golden Business Forms specializes in even shorter runs of 2,500 to 10,000.
"Over the last three years, longer runs have declined, and customers were hesitant to increase inventory because of the uncertain economy," Fleming noted. "In the last three months, we've seen a growth in inventory as the economy grows. Customers have gone back to forms management because they feel invigorated by the economy."
Go Vertical
Vertical markets such as medical, automotive and government are still major purchasers of traditional forms, said manufacturers. Fleming said that the health-care market—which had been declining over the past decade due to consolidation, the economy and an emphasis on monitoring and equipment rather than forms—has now experienced "a big surge." An aging population is requiring more medical services at a time when technology and testing are improving to measure more health indicators, so the need for forms is increasing, he said.
Day related how one distributor, after receiving medical test results in a mailer, tracked down the software company providing the form and is now supplying to 70 different doctor's groups in partnership with the software company.
Automotive customers large and small—"the wrench and grease people"—need traditional forms to record jobs and invoice customers, Fleming said.
Day said that governments "still have a huge need for forms such as jury summons, tax forms, parking tickets and late notices. Some paper never goes away." The education market, while using a mix of traditional and new products, uses "an enormous amount of paper," she said, as does the financial market. "Even though they're imaging checks, you still get a deposit slip and a drive-through envelope."
Opportunities also exist in markets such as software value-added resellers, payroll companies and entrepreneurs. "You have to go out and beat the bushes; there are still mom and pop shops that need unit sets," Douthat said.
Fleming pointed out that in some regions of the country, opportunity exists among minority entrepreneurs who tend to congregate close together, such as Asians and Hispanics. Spanish-language forms, particularly for health-care and government, are a necessity in many coastal urban areas, as well.
Overall, manufacturers say, sales of traditional products hinge on distributors' perception. Even with documented declines in conventional product sales, it's still a nearly $7 billion market.
"There's a perception of decline," Day said. "But, if you're not looking to add value to a product, it becomes a commodity and suffers price erosion. Business is so challenging, especially since Sept. 11 [2001], but there's still something new every day."
Douthat agreed, adding, "Pessimism smacks of something out of control. Take control. There will always be paper around. I'm optimistic because distributors are educated and aggressive. You make your own fate."
By Janet R. Gross
- People:
- Becky Douthat
- Mike Fleming
- Places:
- Fairhope, Ala.