Earlier this year, NAPCO Research published a report on convergence in the printing industry. The most convincing result was that a third (33%) of the commercial printers surveyed stated that they had already expanded their service portfolio in order to take advantage of new growth opportunities – or to take active measures.
One such company is the JKG Group, headquartered in Deerfield Beach, Florida. Founded in 1984 as JKG Printing and Graphics, the company is a case study of the convergence of the industry that changed their business significantly.
Like many of his colleagues, Adam Gittlin, President of JKG Group, had found that margins in the printing industry were shrinking and customer demand was shifting, particularly towards consumer packaging and related fulfillment services such as storage, packaging and shipping.
By the time Gittlin took over management from his father in 2015, the company had already changed its name from JKG Printing and Graphics to the more agile JKG Group, added direct mail to its offering, and moved into a modern 90,000-square-foot building. Centrally located facility for efficient shipping and delivery.
With more space and a better location, Gittlin was able to put a laser focus on product packaging and fulfillment, both of which – unlike most commercial prints – could come at a fair price with healthy margins and still remain competitive. In particular, the personal care packaging market was set to explode, and the JKG Group wanted to be well positioned to capitalize on that growth. At the same time, entrepreneurial and corporate markets actively managed budgets by reducing overheads and outsourcing services like warehousing and fulfillment.
“Increasingly, our customers were looking for support services under one roof to ensure convenience, accountability and cost-effectiveness,” said Gittlin. “And we looked for additional sources of income. Reshaping our business seemed like the right answer for both of them. “
Put the right resources together
Certain resources were required for the transformation to work. Qualified personnel would be required to sell and support the JKG Group’s new packaging and fulfillment capabilities. The company hired a sales manager who has both cosmetic packaging experience and strategic packaging connections. As a technology-dependent company, the JKG Group also provided IT support internally and hired three IT employees within the year. Special training regarding equipment and compliance was offered for operating personnel. Another key addition was a senior production manager who made sure all new parts were synchronized and buzzing.
Capital investments were also required – to support packaging, short-term product boxes, full fulfillment services, and direct mail. Within 15 months, Gittlin added a new Xerox iGen digital press, specialty labeling capabilities, pouch / pouch packaging equipment and cellophane wrapping machines. He has also redesigned his storage room to meet the new requirements.
Getting the right things right was essential to the success of these initiatives. Still, there were several challenges as the company seriously transformed its business. For one, the packaging industry itself is undergoing dynamic change in response to new consumer demands, the green movement, and increased regulation (and deregulation). Price competition has intensified due to the relocation of production. Niche markets like CBD and craft brewing open up narrow but fascinating opportunities. As Gittlin emphasizes: “In order to always be one step ahead of the curve, we have to continuously evaluate the landscape and decide on our next strategic steps.”
The provision of fulfillment services brings its own challenges, mainly related to product diversity. Different product dimensions and weights make special demands, as do hard goods, soft goods and consumables. Some products need customization and some don’t. Will the kit volume be constant or spiky? Does a product need air conditioning or additional security? Will it be sent to other companies or to consumer addresses? Does the fulfillment program for a specific customer have to be integrated into an e-commerce platform like Shopify or WooCommerce?
For Gittlin and his team, the mandate is to be able to individually adapt and profitably evaluate each fulfillment project and, moreover, to be able to quickly mobilize kit-templates from a trained workforce.
Ultimately, the challenge in expanding direct mail services was to use new technology to add value. While direct mail relies heavily on commercial printing – mostly digital – Gittlin believes there is also a need to provide barcodes to offer expanded content and dynamic QR codes to offer video tours and demos. NFC tags (Near Field Communication) offer product retailers in shops and on the Internet enormous interactive potential. Augmented reality apps can turn customer messages into unforgettable user experiences. “Each offering requires a different technology,” he says, “and it’s important to train our customers so they can select and use it effectively.”
How did the JKG Group measure its success in the face of these challenges? The obvious answer is growth in margins and sales – by service category and overall. The JKG Group has started enjoying the result of its strategic transformation efforts and expects additional success over time. “We are continuing to monitor our results closely,” says Gittlin, “and will make course corrections based on what we see.”
In addition to advocating strategic reinvestment in resources and infrastructure, Gittlin is an advocate of constant learning and speaks regularly with clients to understand what forces they are responding to and what is changing their needs. He has an ear for the packaging, printing, fulfillment and postal industries and wants to know what’s on the horizon and why.
“Agility that can be quickly scaled up or down is critical,” Gittlin says, adding that it is also important to be prepared for failure. “But learn quickly and keep moving!” Good advice from this industry convergence case study.