Vistaprint Parent Now Cimpress, Plans Significant Investment in Mass Customization (Commentary by Cary Sherburne)
Monday, November 17, 2014
Press release from the issuing company
VENLO, The Netherlands - The parent company of Vistaprint and other Web-to-print brands has changed its name to Cimpress N.V. The company plans to invest hundreds of millions of dollars over the next five years in the development of proprietary software and production technology, in order to evolve its operational capabilities into a shared mass customization platform (MCP). The Cimpress MCP will aggregate the production volumes of the Cimpress portfolio of brands, each of which empower customers to make personalized, tangible connections in ways that matter most to them.
Investing in a Mass Customization Platform to Transform an Industry
Cimpress intends to make this technology investment to greatly advance its proprietary computer integrated manufacturing technologies, which enable the company to mass customize personalized and unique physical products in small quantities at an affordable price.
“We have a two decade history during which we have started a major market transformation, yet the next 20 years promise to be even more exciting,” said Robert Keane, president and chief executive officer, Cimpress. “Businesses and consumers are still too often forced to choose between the ease and flexibility of digital communications and a more enduring tangible connection with their audience. We are changing that. Our mass customization and computer integrated manufacturing technologies empower customers to make real and tangible connections with the simplicity of personalization that people have come to expect from today’s digital world.”
Founded by Keane in January 1995, Cimpress and its subsidiaries have been leaders in transforming the apparel, printing and photo merchandise industries. The company has built its foundation on the belief that software and production technology can be harnessed to aggregate enormous numbers of small orders into a high volume production flow and, in doing so, break the tradeoff customers traditionally have had to make between the benefits of mass production and the personal relevance of customized products. Cimpress today employs over 400 software and manufacturing engineers and more than 5,300 team members across 16 countries.
The improvements to the Cimpress mass customization platform will be founded on the company’s existing technologies and production operations. Every year since 1999, the company has invested at least 10 percent of its revenues into technology and development, including $176 million in its last fiscal year. Over the past decade, the company has invested over $1.3 billion in technology, development and capital investments.
“Over the next five years, we anticipate directing a significant part of our technology and development budget in support of our platform strategy in order to build intrinsic value per share,” said Ernst Teunissen, chief financial officer, Cimpress. “This level of investment is consistent with the company’s previously issued financial guidance for fiscal year 2015 and its longer-term intent to continue to expand margins and free cash flow per share.”
From Vistaprint N.V. to Cimpress N.V.
Changing the corporate name to Cimpress clarifies the distinction between, on one hand, the corporate entity and its technology and operational mass customization platform and, on the other, the company’s growing portfolio of customer-facing brands. These include popular Web-to-print names such as Vistaprint, Drukwerkdeal, Albelli and Pixartprinting. These brands will continue to serve as the identities and the user experience under which Cimpress provides businesses, graphic professionals and resellers the ability to create customized marketing products to grow their business, and delivers to consumers personally meaningful customized products like invitations, announcements, photobooks and photo merchandise. The stock ticker symbol for the parent company has changed, effective with the start of today’s trading session, to Nasdaq: CMPR.
Don Nelson, Chief Operating Officer, Cimpress
The company also announced that it has named Don Nelson as chief operating officer for Cimpress. In this role, Nelson will be directly responsible for building and advancing the mass customization platform and will oversee several corporate functions.
“The future of mass customization is very promising for those companies that can combine world class capabilities in software and manufacturing,” said Nelson. “The key is to have massive scale, yet produce in small quantities. The old paradigm of job-shop production of orders one at a time simply is not able to compete with technology-driven mass customization.
“Today’s announcement reinforces our commitment to develop our talented corps of engineers and software developers and to make the investments necessary to ensure we remain a world-class engineering organization,” said Nelson.
In support of the multi-year technology plans, Cimpress is actively increasing its recruiting activities at its main development centers in Lexington, Massachusetts, USA and Winterthur, Switzerland. This will expand its already strong foundation of engineering and software development expertise in the fields of graphics processing, mass customization and computer integrated manufacturing.
Commentary by Cary Sherburne
Our readers may have missed the name change of Vistaprint’s parent company to Cimpress noted in its annual report which was released last month. In addition to its ongoing investments in computer integrated manufacturing, the company has also been on the acquisition trail to expand its portfolio, with acquired companies including European-based Drukwerkdeal, Albelli and Pixartprinting.
In a conversation last week, Cimpress Chairman, President & CEO Robert Keane told WhatTheyThink, “Our company is broader than the Vistaprint brand, and we also recognize that there are many different ways to get to the market. There is a huge opportunity in the future for direct-to-customer ecommerce, and we will continue growing that under the Vistaprint brand. But graphic arts professionals and agencies are always going to be highly relevant in the conversation with customers because the face-to-face, high-touch customer services from local graphic arts professionals, retailers, printers and agencies cannot be replicated across the Internet.” Keane states that the company plans to continue to expand its services to the trade to address this part of the market opportunity as well.
As of June 30, 2014 according to its annual report, the company employed more than 5,000 team members in more than 20 different locations across 17 countries. Its North American production facility, located in Ontario, Canada, processes well north of 100,000 orders on a peak day, with each order often consisting of two to three items, according to Keane. That translates to an astounding 300,000 to 350,000 job setups in a single day.
This demonstrates the magnitude of the scale Vistaprint has been able to achieve. Keane adds, “We believe we can build a system that would allow us to aggregate jobs not only within a given web site [such as Vistaprint], but across the multiple brands that Cimpress owns, integrating our technology into a seamless workflow of orders through to the back end. We have made a commitment to create that kind of aggregation.” He emphasizes that the strategy continues to be producing items in quantities as low as one whereas in the past there traditionally have been minimum order quantities. He says, “We are testing that ability right now in apparel, where you could by one customized parka or one soft goods bag.”
Keane projects continued growth both organically and through acquisition.
He concluded, “We sold our first business cards online in 1999, and we are 15 years into that phase of the business. We see this as the next chapter in the development of the corporation. The Vistaprint brand will stay strong. It stands for ease and affordability in the DIY space. But Cimpress represents core web-to-print technology behind Vistaprint applied to other parts of the market in the future.”
Keane indicated there were no current plans to get into the 3D printing market, although they are keeping their eye on that ball. He pointed out that, as a test, Pixart in Europe is already producing short runs of folding cartons, such as takeaway boxes, saying, “This is a good illustration of how mass customization is an opportunity in many places. A small business may only want 100 or 500 takeaway boxes and it is hard to find that in an easy and affordable way. This will always be where Cimpress focuses: small quantity orders of customized products in print or related spaces.”
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