The Check Is in the (Direct) Mail
Short-run, digitally produced direct mail could be the next big thing.
Distributors have long prided themselves on their ability to save money for their customers by finding the lowest-cost vendors, streamlining workflow and using forms management strategies. But, with so many products becoming commodity items, those time-worn strategies are no longer enough to keep distributors' businesses healthy and growing. Savvy distributors are searching out products and services resistant to such price erosion.
One potentially lucrative avenue is direct mail. According to the Direct Marketing Association (DMA), in 2003, approximately $49 billion was spent on direct mail services—including postage, agency fees, printing and bindery—up from $39.6 billion in 1998. That represents an average annual growth of 4.6 percent, and the DMA projects growth rates of 4.9 percent annually from 2003 to 2007, with a total of $60 billion in direct mail spending in 2007.
Forms manufacturers have seen the trends and are responding. "We've invested over $1 million in the last two years just in our mailing department," noted Lindsay Gray, vice president of Acculink, Greenville, N.C.
Fenton, Missouri-based FormStore has expanded "significantly into the laser personalization, lettershop and mailing segment of our industry," said president Paul Edwards. FormStore now operates 30 digital printers, including six digital color systems, and Edwards said that he expects his direct marketing and digital printing business to quadruple this year.
Ward/Kraft, Ft. Scott, Kan., has also made substantial investments in order to benefit from direct mail. The company added an Indigo digital color press 18 months ago, but recently added almost $2 million of digital equipment, according to Roger Buck, national forms sales manager. Ward/Kraft took the plunge after seeing "tremendous growth" in its commercial direct mail business after the Indigo came on line, Buck said. And, extensive market research by the company convinced it that the return on investment would be rapid. "Our projection is that commercial printing overall will add at least $3 million to our business this year, and a fairly large percentage of that will be in direct mail," he predicted.