Paper Price Increases - the Merchant’s Role

Last week’s blog on paper price increases prompted a lot of interest, garnering exceptionally high readership. Following the posting, I received a good number of emails and phone calls from printers who thanked me for asking hard questions about an issue we all face.

But what about the response from paper industry?

It’s still early, but its representatives have seemed to be more interested in asking me about the opinions of others rather than offering their own.

During a lively debate with one of the leading merchant distributors, an important question came to mind:

“For whom is this distributor working?”

As you might expect, my conversation partner was adamant that his focus was on MY needs; we printers are his primary concern, he asserted with impassioned disingenuousness. So I challenged him by asking a few questions.

How many mills do you represent?

“Dozens” he said.

How many mills do you represent that matter to me?

At this point, he acknowledged that there are only a few mills that can appropriately serve a medium- to large-sized printer. So on the supply side, we see an unusually concentrated field, with a few suppliers that carry considerable weight in the marketplace.

I then asked about his customer base.

He parried and feinted, but in the end was forced to admit that, with thousands of printers compared to only dozens of paper mills, the weight of influence falls heavily in favor of the mills.

So I would contend that mill relationships ARE more important to most distributors than any particular printer. The consequences of a relationship breakdown in a marketplace with two or three suppliers are massively larger than the consequences of losing a single customer, regardless of the size of that customer.

Out of this, I take a couple of key lessons:

1) I look to merchants for service, stock availability, logistics and market intelligence. I cannot, however, rely solely on them for market intelligence, because in the end, I fear their loyalty is only partially in my court.