Cimpress (Parent of Vistaprint ) Is Building a Global Mass-Customization Platform
There are any number of narratives that can illustrate the beauty and genius of what Robert Keane hath wrought. But the founder of Cimpress, the parent organization behind Vistaprint - a realized vision that for the last 20 years has provided Do It Yourself marketing materials to the micro business community - managed to encompass everything the Dutch-based global firm stands for in a span of less than three minutes.
Early last month, Vistaprint released a multimillion-dollar television advertising campaign with a commercial spot titled, “The Postcard.” The video follows a father and son team who open a bakery and use multiple print products, including postcards, business cards, flyers and in-store advertising banners, to grow their business. The son grows into a young adult and is soon lured into joining the corporate world. But printed reminders of the bakery resonate with the young man and he decides to rejoin the family business.
At the end of the piece, father hands son a set of business cards that read, “Owner.” The ad concludes with the tagline, “Everything you create matters.” The piece, sans dialogue and set to music, truly tugs at the heart strings and romanticizes the blood, sweat, tears and relationships that accompany a small, family-owned business.
It is the attention to detail that Cimpress pays to the $30 billion micro business space that has catapulted the marketing arm of mom-and-pop shops everywhere into a global giant. In 2006, when the company was first profiled by Printing Impressions, Vistaprint had registered annual sales of $150 million, quite an impressive total for a business cranking out thousands of $25 to $40 orders daily.
Today, Vistaprint is just one arm in the Cimpress machine that is tracking sales of $1.5 billion for the fiscal year ending in June. The company operates manufacturing facilities in Australia, Canada, India, Italy and The Netherlands, with software, customer support and marketing locations in the United States, Switzerland, China, Jamaica, France, Spain and the United Kingdom.
An Expanding Global Presence
More than 5,000 employees occupy north of a million square feet of production space and, counting offices, the Cimpress footprint touches 16 countries. That includes nearly 800 people in the Boston suburb of Waltham, MA, where new offices will be ready in September.
Cimpress has also been an aggressive, but discerning, shopper on the M&A landscape, landing a trio of foreign properties to bolster its global presence: Norwegian photo product specialist FotoKnudsen (through its Albumprinter property); Pixartprinting, a Web-to-print (W2P) firm addressing graphic arts needs in Italy, France and Spain; and People & Print Group (now called Printdeal), another W2P platform set in The Netherlands.
So while the depth of the company’s geographic footprint has contributed greatly to Cimpress’ 10x sales explosion, the basic premise of the entity remains true to the business plan that Keane - the firm’s president and CEO—carved out in 1994: to serve the marketing needs of the small, micro businesses and consumers who want to boast collateral that reaches the professional level of Corporate America.
“Twenty years later, we remain very passionate about empowering our customers to make an impression, to help them create beautiful, tangible products - inexpensively, quickly and easily at low volumes,” Keane remarks. “That vision continues to remain constant.
“What has changed is the strategy behind our manufacturing technology, the ceaseless overhauling and upgrading of our software systems, and the way we go to market. Any company that hopes to endure over decades has to change constantly.”
That strategy, the improvement and leveraging of the manufacturing mousetrap, is taking the form of a shared mass-customization platform (MCP), a five-year initiative that will see hundreds of millions of dollars invested in the development of proprietary software and production technology. The MCP will aggregate the production volumes covering Cimpress’ entire network of brands, not just Vistaprint, to foster the economical customization of small quantities while standardizing the application programming interfaces and aggregating volumes into the back-end system. The MCP reboot is scheduled to deploy its first modules in June of 2016 but will continue to expand and improve for years to come.
The investment, while ambitious, is not out of the ordinary for Cimpress, which has sank at least 10 percent of revenues into its technology/R&D program in each of the last 15 years. In the past decade alone, Cimpress has earmarked a staggering $1.3 billion in technology, development and capital investments.
According to Don Nelson, executive vice president and COO, the key to the MCP is driving products that can serve diverse market segments and enabling the back end of the process to perform with the same accuracy and expediency that Vistaprint has enjoyed for 20 years. “A lot of the capex we’re making is on the back end, with regards to building out the mass-customization platform,” Nelson remarks. “We’re moving from what I term single use - built by one company for the use of one company - to multiple use, which is where we’re taking all of our strategic capabilities and leveraging them across many brands, including with third-party partners who compete with Vistaprint.”
Cimpress does not dress the same way for work in every region or for every customer type it serves; a one size fits all approach won’t suffice. Nelson points out that Printdeal and Pixartprinting serve a different customer base: the graphics professional and local printers, with different needs than those of Vistaprint. The front-facing brands and investment needs are quite different, as well. The only assimilation is the MCP on the back end of the process.
From a Vistaprint-brand perspective, huge investments continue to be made in do-it-yourself processes, enabling customers to create graphics through template-based desktop publishing tools, as well as bolstering content and site design to allow a huge proliferation of product choice and customer support. The investments to serve the mass market cost in excess of 40 percent of Vistaprint-branded revenues. Cimpress sells its services wholesale, at a steep discount relative to Vistaprint prices, to players with customer franchises in other parts of the graphic arts market that don’t require the company to make such huge marketing and design template investments.
Back-End Manufacturing Models
“I look at companies outside our industry for inspiration,” Keane remarks. “Volkswagen has a whole range of products - Audi, Skoda, Bugati - that go after very different end customers, but they have the same back-end manufacturing. They’re leveraging scale. Likewise, Amazon’s AWS has proven that scale-driven back end advantages don’t need to be limited by corporate ownership. Netflix uses Amazon Web Services’ platform even as Netflix and Amazon compete head-to-head in the market for downloadable movies. The Cimpress vision is to bring that type of platform model to the printing and other mass-customization industries.”
Cimpress’ platform includes an equipment arsenal that resembles a United Nations of printing press manufacturers, with technology represented by Komori, Manroland and Heidelberg on the offset side, and with HP and Xeikon on the digital end. The special sauce lies in software and lean manufacturing capabilities that, in 2014, processed 30 million orders comprised of 80 million individual products. For example, in the second quarter of 2014, the company took in 8.8 million orders, with roughly 24 million items - postcards, business cards, flyers, embroidered products, etc.
Cimpress is flashing a trade printer side of its personality through a reseller program in the U.S. and Australia (Vistaprint Pro Advantage), through several of its European brands that focus on serving the trade, as well as via white label relationships with office product retailers like Staples and FedEx Office. The Pixartprinting acquisition brought a bevy of opportunities for Cimpress to serve the trade with quantities that many mainstream printers either don’t want to be bothered with or that don’t possess the MCP blueprint path to profit.
In a sense, Keane dug his own fishing hole, but didn’t find many anglers following him to it.
“That do-it-yourself, $10, $20, $40 order was difficult to conceive of in the traditional printing world,” Keane recalls. “Coming from the software and direct marketing world, Vistaprint intentionally chose to service a market where our small customers were almost the worst nightmare of the traditional printer. We never felt we were competing against printers; we were competing against bad clip art, Broderbund and Avery Dennison. New entrants to the industry were never able to combine our software, plus operations excellence, plus direct marketing.”
Cimpress has taken great pains to improve its unique processes, according to Will Jacobs, senior vice president of manufacturing and supply chain. In the past five years, the company has reduced quality complaints by 40 percent, reduced lead time by more than 70 percent and improved labor productivity by over 50 percent.
“When I first came on board, I was struck by not just what I saw from a technical standpoint, but from the level of talent we have here,” Jacobs says. “There’s a continuous drive for improvement combined with the ability to embrace change and drive growth.”
Speaking of growth, the newest members of the Cimpress family have enjoyed solid performances in their first year with the organization. Pixartprinting is growing at a 25 percent rate and Printdeal has pushed past the 30 percent mark, as well.
The new name itself is a function of two variables: the front portion, CIM, acknowledges software-driven computer-integrated manufacturing. Impress derives from impressions and is a nod to the notion of empowering people—like the family-owned bakery in the new Vistaprint television ad—to make their own impression. Moreover, with the acquisitions growing, Cimpress wanted to distinguish between the corporate entity and its customer-facing brands.
Moving forward, Cimpress’ executive team sees ample opportunities to garner growth opportunities with the enhancement and development of existing products—for example, business cards have been tweaked with printing embellishments including raised varnish, spot UV and foil treatments. The company is investing heavily to enter new product categories as well, such as the markets for embroidered apparel and promotional products. Both Keane and Nelson see unlimited potential for the full product catalog.
An Explosion of Products
“Part of the objective of the mass-customization platform that we’re building is to quite literally explode product selection,” Nelson notes. “We’re seeing a huge shift toward significant increases in variety. We’re coming out of having highly standardized products to a future where we’re looking to have thousands and thousands of products that we’ll have available within the mass-customization platform. Within those products, we have millions of selection options. And, we seek to make those available around the world.”
In the final analysis, Keane is not trying to reinvent the printing press. He is doing more than his part to alter the way society views the importance of the printed word and believes the recent TV commercial will have a salutary impact on the industry as a whole. Heck, Keane isn’t even interested in the mainstream printing customer, which makes him an even better evangelist from an industry point of view. Yet to reach those non-mainstream small business customers, he sees a future laden with partnerships.
“Staples and FedEx Kinkos have lots of options because they are very large, successful companies and they’ve chosen to partner with us on the back end,” Keane says. “With the introduction of the Cimpress MCP, we are going to be able to partner with the small printers of the world, as well. Nothing illustrates that opportunity more than our business in Spain, Italy and France where, despite tough economic conditions, Cimpress revenues are booming because we are partnering with local printers who sell under their own brand name.
“We’ve been lucky and realistic in that we have always embraced change, even as we pursued our unwavering vision. We’re embracing the need to constantly evolve and, sometimes, revolutionize everything we do.”