After more than a decade and surely more than $100 million, Kinko’s (by whatever name they are known today) may have found the solution to their “online print” problem.
Outsource it to VistaPrint!
VistaPrint announced that the company has a “multi-year strategic alliance” with FedEx Office – formerly FedEx Kinko’s formerly Kinko’s. The two companies have developed and are launching a new application for the design, order and printing of business stationery and marketing materials.
It’s déjà vu all over again…
Let’s go back almost a decade and count the ways in which FedEx Office/FedEx Kinko’s/Kinko’s has tried to build an online system to take advantage of its huge network of neighborhood copy shops and “closed door” production facilities.
In two parallel tracks, the company developed solutions internally and acquired technology to let customers “design and order their customized products online.”
Online Copy Shop
The first iteration was the Document Store – an online solution still available – followed by File/Print/Kinkos (also still alive). The difference between the two? The Document Store is an online solution requiring the user to upload a file in a compatible format to a secure site and then select printing and finishing options. File/Print/Kinko’s requires the user to download a print driver – PC compatible only – to create, specify and upload the files for production. Files are distributed for production to a copy shop chosen by the user or delivered to a specified location.
These two applications are essentially online copy shops that offer either delivery or a pick up option. Mimeo has taken over that market by providing print-and-distribute rather than distribute-and-print services. How did they get their foothold? By controlling a single production facility and guaranteeing a quality product.
(Full disclosure: After two unsuccessful attempts to use File/Print/Kinko’s several years ago, I gave up. I’ve made purchases through Mimeo twice – the first was delivered a day late, the second on time. Print quality was excellent in both cases.)
Business Card and Stationery E-commerce
In March 2000, Kinko’s acquired LivePrint, an online print service provider, for $40 millon (rumored) and spent approximately the same amount (also rumored) to launch Kinkos.com. By 2003, LivePrint and Kinkos.com were pretty much history.
Fast-forward to April 2003, and Kinko’s tried again. This time the company acquired ImageX at a much better price, just $16 million. Another attempt was made to launch in-store kiosks and an online print site. Both were gone by the end of 2005.
Next a team of ex-ImageXers (say that quickly three times), spent a year working with Kinko’s to build yet a third version to offer print design and ordering services that would overlay the company’s production network. That version got scratched too.
Outsource to the Experts
The partnership announcement with VistaPrint indicates that FedEx may finally have admitted that it is a good idea to leave some things to the experts. While FedEx nearly owns the concept of neighborhood copy shops, they have never been able to bring a strong print e-commerce solution to market.
VistaPrint nearly owns the online print design/order space; so it is logical that the two should come together on this project.
Let’s see if together they can pull it off.
Discussion
By Slava Apel on May 01, 2009
Would be interesting to see what happens to Vistaprint and OfficeMax deal, as it sounds similar to Fedex.
By Michael J on May 01, 2009
Gail,
Great post.
It's so useful to get the historical picture. My takeaway is that getting the web2print piece is as hard for globals as for local printers. I think it should give us all pause when we blithely tell printers on the ground that they have to adopt web to Print and should focus their energy on doing that.
But the other takeaway is that with HP and MarketSplash and Staples, and now Vista Print + Fedex + Office Max, the game is becoming much more defined.
Meanwhile, Mimeo is a demonstrated leader, but it shouldn't be overlooked that HP is one of the investors in mimeo, so I guess they are hedging their bets.
I think all of this supports the idea that we may be in for a tipping point change in 2010.
What's still unclear is where the 95% of commerical printers are going to fit in. I think the most likely is that they will build upon their present customers to leverage their locations to serve local customers, while the globals fight over the Cloud based solutions.
By Slava Apel on May 03, 2009
Michael, the 95% of remaining printers can play the same game by entering into web to print, online marketing, partnerships. Nothing is out of reach, especially being smaller, they can move faster, and execute better. The speed to market has been shortened from years to days. There is no mystery left in what has happened here between Vista and Fedex or between Marketsplash and HP. Anyone, can execute same strategy, and hopefully better.
Question is, who is going to be the next one?
By Michael J on May 04, 2009
Slava,
I agree.
Any business in the 95% that is still in business after the last couple of years have gone through the winnowing process. They are masters at responding quickly to specific customers with specific needs. Given how inexpensive and easy it is now to set up a customer facing presence on the web, any printer can do it.
The funny part to me is that Fedex spent millions of dollars and then had to give up and join up with Vista. Kodak spent millions on their attempt, which crashed and burned. Will MarketSplash scale? Given the record of failure of the globals, that story still has to be told.
The advantage in a disruptive economy with new rules goes to the fast, not the big.
By Alan Roberts on May 04, 2009
Lets see who is actually going to be the winner on this one. The average transaction value for Vista Print is around $ 27.00 and I understand that they make a large percentage of their revenue and profitablility on shipping. Is that revenue and profitability now going to FEDEX? There is not doubt, Vista Print has a great e-commerce model and they have learned to engineer their production processess to make money at a low average per transaction dollar. They are relentless marketers if you have actually ever purchased from them. I purchased Christmas Cards and I know get an almost daily email trying to get me to repurchase. I just don't get the retail connection with Fedex, I guess we will wait and see
By Gary on May 04, 2009
This is another good reason for independent printers to avoid outsourcing to VistaPrint and avoid shipping with FedEx whenever possible.
By Michael J on May 04, 2009
On the other hand, Vista print may turn out to be a marketing play, as opposed to a printer..
Although I don't know what's true, here's a comment I got at my blog..
"Please don't use Vistaprint or recommend it to your readers.
Using Vistaprint could very likely lead to you being signed up to FAKE discount clubs and hundreds of dollars benig taken from you Visa/bank without your knowledge or permission.
I have a huge blog post with all the details of all of the different scamming sites Vistaprint and Adaptive Affinity run and how best to get a refund.
http://www.hubbers.com/index.php/i-got-scammed-by-vistaprint-and-adaptive-marketing-and-adaptive-affinity-ltd-and-amazon/
If you don't believe me check this blog and the scores of comments form people who have been ripped off!
http://www.thegeneva.com/vistaprint-scamvprewards-scam-warning/
Or try Googling "Vistaprint scam"
http://www.google.co.uk/search?hl=en&q=vistaprint+scam&btnG=Google+Search&meta=
You can also sign this petition!
http://www.petitiononline.com/mod_perl/signed.cgi?stop1111&1
By Allan Larson on May 04, 2009
I see many commercial/digital print customers wanting to break into this market and compete against VistaPrint and others that are situated in tax-friendly regions, built around less-expensive production locations with proprietary interfaces and a massive volume where their gross margins and revenue are growing.
Clearly Business to Business Web portals are not in their radar yet and still provide an area where printers can find profitability through automation. I have a hard time seeing anyone at a Consumer level competing against this, especially now with the FedEx flypaper. Those commercial printers who can leverage the Web for client interaction, upload, approvals and keep costs down can profit very well.
However, Obama might have something to say about the tax implications of the foreign activities...
Financial Metrics:
* Revenue for the third quarter of fiscal year 2009 grew to $127.5
million, a 21 percent increase over revenue of $105.8 million
reported in the same quarter a year ago.
* Gross margin (revenue minus the cost of revenue as a percent of
total revenue) in the third quarter was 63.5 percent, compared to
61.3 percent in the same quarter a year ago.
* Operating income in the third quarter was $16.0 million, or 12.5
percent of revenue, and reflected a 44 percent increase compared to
$11.1 million, or 10.5 percent of revenue in the same quarter a
year ago.
* GAAP net income for the third quarter was $14.2 million, or 11.1
percent of revenue, representing a 24 percent increase compared to
$11.5 million, or 10.8 percent of revenue in the same quarter a
year ago.
* GAAP net income per fully diluted share for the third quarter was
$0.33, representing a 32 percent increase compared to $0.25 in the
same quarter a year ago.
* Non-GAAP adjusted net income for the third quarter, which excludes
share-based compensation expense, was $18.9 million, or 14.8
percent of revenue, representing a 25 percent increase compared to
$15.1 million, or 14.3 percent of revenue in the same quarter a
year ago.
* Non-GAAP adjusted net income per fully diluted share for the third
quarter, which excludes share-based compensation expense, was $0.44,
representing a 37 percent increase compared to $0.32 in the same
quarter a year ago.
* Capital expenditures in the third quarter were $18.1 million, or
14.2 percent of revenue.
* During the third quarter, the Company generated $19.5 million in
cash from operations and $(0.5) million in free cash flow, defined
as cash from operations less purchases of property, plant and
equipment, and capitalization of software and website development
costs.
* The Company had $114.7 million in cash, cash equivalents and
short-term marketable securities as of March 31, 2009.
Operating Highlights:
* VistaPrint acquired approximately 1.5 million new customers in the
third fiscal quarter ended March 31, 2009.
* Repeat customers generated approximately 66 percent of total
quarterly bookings in the third quarter, compared with 64 percent
in the same quarter a year ago.
* Average daily order volume in the third quarter of fiscal 2009
exceeded 44,000, reflecting an approximate 33 percent increase over
an average of more than 33,000 orders per day in the same quarter a
year ago.
* Advertising spending in the third quarter was $24.4 million, or
19.2 percent of revenue, compared to $19.9 million, or 18.8 percent
of revenue in the same quarter a year ago.
* Non-U.S. markets contributed 38 percent of total revenue in the
third quarter, flat with 38 percent in the same quarter a year ago.
* Average order value in the third quarter including revenue from
shipping and processing was $31.06, a 5 percent decrease when
compared to $32.54 in the same quarter a year ago.
* Web site sessions in the third quarter were 65.8 million, a 38
percent increase over 47.6 million in the same quarter a year ago.
* Conversion rates were 6.0 percent in the third quarter of fiscal
2009, compared to 6.4 percent in the same quarter a year ago.
* VistaPrint broadened its promotional product offerings with the
introduction of key chains and mouse pads.
By George on May 04, 2009
Two companies with crappy quality banding together for customers who want free printing.
Quick printers all over must be getting a good laugh.
The only company that benefits for this union is Mimeo ( their product will look even more impressive)
By Slava Apel on May 04, 2009
Allan L. for your comment of "However, Obama might have something to say about the tax implications of the foreign activities".
Allan, did you ever see the movie "catch me if you can"?
In Q3 recording of Vista's investor meeting (4 days ago), Vista announced complimenting their tax strategy by relocating part of their taxable operations to Netherlands.
Exact quote from Robert was: "...experts we work with for years including in this domiciling of the company to the Netherlands. So just to be clear the company will be Dutch company if it's approved by shareholders..."
Furthermore: "...we are very happy that we are operating within tax structures that are well established in those countries until we feel that it make sense for us to move ..."
By dj on May 04, 2009
Bad news for traditional printers. As long as Kinkos was run by people who thought they understood the print business but didn't really, they were easy to compete against.
I think Vistaprint will be a much tougher competitor if and when they digest the acquisition, or the contract, or however you want to call the coup.
By Michael J on May 04, 2009
The bad news is actually for HP and Staples and the franchises. Regular printers are mostly in a very different space anyway. Their value is their relations with their customers in specific defined geographic spaces.
By Brian Regan on May 05, 2009
Staples is trying out Kinko's like stores already, been testing it for over a year. I saw my first one in Boston near Newbury St.
By Michael J on May 05, 2009
Staples is a bit like Walmart. They test, test, test and then they scale.
By Marc Fors on May 05, 2009
Vista Print understood early that it is all about creating a frictionless user interface: an interface where an average human with average skills could actually buy something from them without getting lost or frustrated. Fedex/Kinkos never got that, they consistently presented complex UI's with multiple screens and options that only a technologist or print geek could love and were surprised when nobody embraced it. ("But look how much you can DO!")
HP's MarketSplash suffers from the same issue - a cumbersome UI that, despite a few Adobe Flex 'eye-candy' touches, seems to be specifically designed to get you to give up trying to do it yourself and call 1-800-Logoworks.
Consumers and Small Businesses do not want an intimate relationship with a print portal - regardless of the brand cache - they simply want good print to happen easily and to get on with running their own business. Vista Print gets that, and now so does Fedex.
Advice to HP: Capitalize on your investment in Mimeo. Go to school on their experience and insight to make the next version of MarketSplash actually usable.
Advice to Printers: if your web2print portal requires more than a online self-demo to use and you are expecting retail users then you are out of step. If you have designed or deployed a dedicated storefront for a big key client's work, and think that you have a lock on that client because of the storefront's complexity - think again - Simplicity is gunning for you.
By GeorgeT on May 05, 2009
You miss the point!!
Kinkos and Vista Print customers are different from the traditional quick print customer. While Kinkos and Vista Print try to "capture" the market it only helps the quick printer make strong relationships with their customers.
WE HAVE EXPERIENCE they have money
In the end its comes to the product knowledge!!
By Michael J on May 05, 2009
@ GeorgeT,
Even better we have experience and speed. They have money . . .at least for now..and are sooooooooo slow. A gezillion dollars and years for Fedex to do a Web2Print and not get it right. LOL.
By Ben C. on May 06, 2009
The file/print/kinko's service is defunct. We use printonline.fedex.com now, which is way easier to use, you can set up delivery to your address, and doesn't require any additional software on your computer. I've not heard any complaints from my customers so far.
BTW,
The new name is FedEx Office
By Michael J on May 06, 2009
@ Ben C,
Thanks for the info. Especially the Fedex Office piece. To me that says the battle of the titans is going to be Staples v Fedex. To the quick goes the spoils.
Still, I think it's pretty clear that it's taken a long time and lots of dollars to get to Fedex Office. That was where Kinko's was going when the purchase was first made. From here it looks like Fedex saw they were buying more pick up points, instead of the way UPS started a whole chain of the UPS stores.
I wish all of them good luck. It's going to get very nasty out there fighting for the bottom end of the micro and small business.
Meanwhile independents will continue on organically growing their long term customer base.
By Slava Apel on May 06, 2009
According to Vista statements, Fedex and Vista tested the integration and implementation in some Fedex stores for a few months.
Based on those tests, they have achieved results that allowed Fedex to move forward.
Meaning:
User interface was usable.
Installations were profitable.
Staff were trained and supportive.
All they are doing right now is scaling up to clone it at every location.
What's in it for Fedex? Fewer employees need to be trained, while maintaining same profit per order. What’s in it for Vista? Two times the volume they are getting from Office Max.
So for those who are saying it's not going to work, or it's not going to be profitable... It already IS working and profitable! (Or the test locations would have failed)
For those who want to be just like them. Copy the strategy!
Fedex and Vista have invested into training of your future customers, now provide customers the expertise and service that you have, while offering everything that Fedex has to offer.
By Michael J on May 07, 2009
Nice point, Slava.
The trick for the 95% is to see what to do next. Everyone is pretty sure they know they have to do it, but the reorganization and focus time necessary gets blabla about "it's not going to work" or "not for my business."
What they are really saying is "i don't have the time." If someone can solve the time issue, this functionality explodes on the ground.
It might need an integrator as in "I will set up and manage your site, then turn it over to you after a couple of months or whenever you are ready to take it on."
By Slava Apel on May 07, 2009
Michael, you sound like you have been pitched by my sales stuff :) with your comment "“I will set up and manage your site, then turn it over to you after a couple of months or whenever you are ready to take it on.”"
Most web to print providers will not leave you with a solution still packaged in a box and will guide you with step by step of how you can execute a strategy. Most will manage it for you until you are ready.
You are right about allocating the initial time and showing interest though. Just having the right technology won’t make you successful.
Web to print is not a secret anymore; there are hundreds of success cases. Strategies, execution plans, marketing plans, user interfaces, connectors back into MIS, connectors into fulfillment, scheduling, all has been done and proven. And if Vista/Fedex were able to pull it off, anyone else could do as well. You don’t have too look to hard to find a solutions provider, or as you said an integrator.
By Jenny Robertson on May 07, 2009
As the communications manager for FedEx Office, I appreciate the interest in our company. I also would like to clarify a few points.
The application we are launching with VistaPrint is one piece of our e-commerce offering. As referenced, we also have DocStore and FedEx Office Print Online. Each solution serves a unique customer need and addresses one of our key business categories. We understand that the printing needs of a small business may not be the same as a traveling professional or a corporation with hundreds of locations.
DocStore enables companies with documents such as training manuals and marketing materials to store them in an online catalog where they can access them, update them and print them on an as-needed basis. This service allows companies to maintain brand integrity across a distributed workforce while also preventing waste.
FedEx Office Print Online allows customers to print documents via the Web by choosing finishing options, proofing in an online preview, and printing at the FedEx Office of their choice or having it delivered to the location of their choice via FedEx.
The new alliance with VistaPrint will allow small and medium size businesses to easily design and print materials such as business cards and brochures, giving us a strong presence in the category of business marketing solutions.
These digital network offerings combined with our retail and transportation networks give us a unique position. We can provide different tools for different categories of customers. Yes, we have explored some different options. As technology continues to evolve, we will always seek to stay ahead of it.
I would also like to invite Ms. Nickel-Kailing to give FedEx Office Print Online a try again. (http://printonline.fedex.com). We've made many enhancements, and we are pleased with the customer feedback we are receiving.
By Gail NIckel-Kailing on May 07, 2009
Jenny,
I will do that. It has been several years and my experience then was enough to scare me off for life. Things change, systems improve, I'll try it again.
Gail
By Michael J on May 07, 2009
Slava,
A question: you say "will guide you with step by step of how you can execute a strategy."
Suppose I'm a printer. I don't want to be guided. I want to give you some money to set the whole thing up. Work with my people as needed, but you take on the Project Manager responsibility. I give you money. You give me a date on which it will be running in alpha, beta 1.0, release 1.0.
Then you sell me an upgrade service to get to 1.5, 2.0. 2.5 etc.
Is that experience available from web2print system providers?
By Slava Apel on May 08, 2009
Michael, absolutely yes. For a list of those providers call me live 800-355-4498 x224, so this forum won't become about Web to Print, SEO, SEM, EMS and sales and stays on Vista/Fedex issue.
And to bring us back to the issue.
Thank you Fedex for clarifying the postion of VistaPrint in your mix of web products.
But aren't you also at this point outlining an exact strategy to any other printer of what your offer is going to be for them to replicate?
Fedex online offers are:
-DocStore a Mimeo approach. Search for "web to print storefront" online to get same..
-FedEx Office Print Online. Google "ftp replacement for printers" to get same.
-Vistaprint offer, a SOHO, design online template approach. Search for "web to print technology" to get same.
By combining these 3 techniques, anyone and everyone has the same technological capabilities.
The only thing is left, as Michael J would say, make the time.
By Ed Patter on Jun 02, 2009
Vista Print is not the answer for Fed Ex, they are actually a competitor! I worked at Kinkos and always used ASAP Printing in Salt Lake City for outsourcing partners for print jobs. Those guys have the best online system I have ever seen, and they were all about getting the printing right, and on time. Why would FedEx choose to let Vista in the door? It's like letting the fox into the hen house! FXO may be on the eve of distruction...
By Michael J on Jun 02, 2009
Given that FXO just had to sell their stores in London, I think you may be right.
I wouldn't be surprised if they sold off the printing piece. given that there are both UPS and FEdex pick up boxes every where, I can't see how the expense of running a print shop is worth the trouble when the real business is logistics.
The UPS stores seem to be grwoing organically from the ground up. If I had to bet, I would bet on them.
By Charles on Jun 03, 2009
I am surprised no one has mentioned OfficeMax ImPress. As a Marketing Director (and former Mimeo customer) for a Global Organization I find their e-commerce offering very flexible and robust, not to mention we get excellent account support both locally and nationally.
By Ed Patter on Jun 03, 2009
UPS stores are all independent owners. There is virtually no support for them from UPS corporate, (who gets a free shipping location from a mom and pop investor...) and there is actually a class action lawsuit in courts from hundreds of UPS stores that were hung out to dry. They have no print training given to them, and are not serious about partnering, except in an adhoc way on a per store basis. I doubt the UPS stores will survive. OfficeMax has old school policies for paying it's vendors and so far has not been able to align itself with a core product that meets the online competition squarely. FedEx Office would be the answer, but they need to have the right Vendors set up, not Vista scam....
By Michael J on Jun 03, 2009
On the other hand, if UPS stores are independent store owners, that might be a fertile hunting ground for the franchises. AlphaGraphics, Sir Speedy. If the owners are proven business people I would think it's very good news for anyone interested in fast growth with a very addressable market.
By Byron Boyd on Jun 18, 2009
Isn't it about time that all of the printing companies quit using FedEx? They will win big with Vistaprint and then will they catch a bunch of flack from the printing industry, they will sell FedEx Office off to VistaPrint. Either way they create a big competitor.
By Michael J on Jun 18, 2009
Byron,
Everyone should check out the new service from the USPS of all people. The single box, weight doesn't count, goes for 10.50 overnight + 60 cents for tracking.
Perfect to keep the shipping costs of small jobs under control.
Plus they will give you the boxes, and do the pick up.
Discussion
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