Profiting Through Trade Brokering

It helps to focus on why brokering out work makes sense in the first place. Greg Muzzillo, founder of Independence, Ohio based Proforma, said there are two sides to every printing business.  “One key side is print production, the other key side is sales,” he said. “There are a number of printing companies out there today that are so busy and focused on the printing side of the business that they do not have time to focus on the sales side of the business, resulting in shrinking sales, diminishing profits and loss of potential opportunities.”

In order for printing companies - particularly those under $5 to $10 million in yearly sales – to thrive into the future, they must have two options. These are either a best-in-class, efficient low-cost printer, or the opportunity to become a distributor and eliminate most, if not all, equipment, focusing instead on becoming a great sales company, Muzzillo said.

In the past, printing was an art form and a craft, he added. That’s changed. In today’s digital  world, quality is assumed and a great deal of printing has become a commodity item. Most companies that only sell printing find themselves increasingly selling on price alone. “That’s a real challenge for smaller printers that cannot become the low-cost provider,” Muzzillo said. “The better option is to become a complete solutions provider selling not just printing, but also selling many other items their customers want, including promotional products, wearables and uniforms, packaging, signs, banners, displays and much more.“

Proforma is a distributor whose tagline is “one source with infinite resources,” he said. It’s an agency that does not charge the agency fees. When a customer asks Proforma for printing, the company doesn’t simply quote a price. It attempts to learn more about their project, and what other solutions it can provide for the project.

“For example, if a company wants a mailer to promote attendance at a trade show, most printers would quote the job and hope they win,” Muzzillo said. “At Proforma, we offer a total solution including helping with the booth, signs and banners, uniforms [for] booth workers, promotional giveaway items and more. In today’s world where the customer wants to buy more stuff from fewer suppliers, this is a very profitable approach.”

Muzzillo adds that based on his lengthy experience, there aren’t many customers looking for a new print service provider, given that printing is considered by many a commodity. But interestingly, all customers are looking for trending, new promotional ideas, he said.

“People love promotional items; they are easy door openers,” he added. “At the end of the day, I believe the best path forward for many small printers is to focus less on printing and more on becoming a distributor and a full service provider. At Proforma, we have a few members that are former printers that put their equipment behind them and became full-service solutions providers. They all said they should have made the change years ago.”

Boosting margins

The most effective way to boost margins is to ensure there is value added to the solution or the process, said Beth Marston, vice president of sales at Navitor in North Mankato, Minnesota. “That value must be of benefit to our distributors or their customers, and usually translates into time saved or pain relieved,” she said. “Things like sales support and consulting as well as technology to streamline processes can translate into cost savings to share all around.”

As a manufacturer, Navitor experiences supply chain pressures similar to those felt by the printers and distributors it serves. This year, Navitor has witnessed an uptick as a result of raw material increases due to a tight paper market and growing transportation costs to transport those raw materials throughout the supply chain, Marston said. These were more aggressive than what Navitor has seen in the past, and as always, the company negotiated to minimize the impact to its customers. “Fortunately, investments in efficient equipment and improved technology enable us to keep rate increases at a minimum,” she added. “By optimizing our footprint and output, we can help our customers protect their margins.”

One of the key components Navitor account executive Justin Kaus’s customers must understand is what their own end users are looking to achieve.

“Once we understand that main pain point, we can leverage printing processes and manufacturing to give our distributors the products their end users need,” he said. “I mention leveraging the available printing processes as we have digital equipment that is likely more efficient than what many of our distributors may have on premise, which can enable a more competitive price that they may not be able to achieve themselves.”

Working with brokers

Among tips useful to keep in mind when working with a wholesale supplier, one of the most crucial is to grasp its own customers’ market strategies and hurdles. “It’s important our distributor customers know we understand they are entrusting us with their brand and reputation,” Marston said. “We make sure we understand their strategies and positioning in the marketplace overall, and of course their challenges with specific projects. Collaborating on a proposal upfront so both parties understand the end customers’ expectations is critical to success. It also helps everyone from on-boarding through execution.”

Navitor offers the distributor the ability to be a single-source solution for its customers, Kaus said. That means “being able to bring an expanded breadth of print products to their customers that they may not be able to otherwise offer,” he said. “One of the areas where this single solution is visible is when we are working with brokers and we try to better understand what their customers are dealing with in the marketplace and what is being purchased for print products in that vertical.

“We have built out several different Vertical Market Sets that enable the broker to demonstrate the breadth of products in print they are capable of offering. The vertical market kits also give them some relevance upfront and demonstrate their understanding of potential needs. That tends to spur their end customer to go into their file cabinet, pull out all . . . print materials they’ve purchased in the past and opens a great dialogue on their current print needs.” 

Navitor can bring signage to the table, and can provide the distributor with vertical-specific products enabling them to sell more to particular customers, Kaus said. Navitor has learned a focus for many of its distributors is looking at their current book of business and determining what products they aren’t selling. Eighty percent of a distributor’s business might be within the promotional and apparel world. “And they should say, ‘Who are you purchasing your print from these days?’” Kaus added. “A lot of distributors are working with their customers to find out what they could be selling. That ‘what else’ is print.”■