Does the Web Foster Paper Use?

The answer is a resounding yes-and a quiet no.

Michael J. Ducey -- graphic arts online, 2/1/2001

The catalog business generates over $100 billion in sales each year. Although its growth rate peaked several years ago, and the 1990s were generally "up and down," the paper business counts on several million tons of coated and uncoated paper consumption by retail and wholesale catalogers each year.

In 2000, this represented some 20% of all printing and writing papers by weight. Growth, like the business itself, has been elusive in some years, thanks in part to rising postal rates and weak retail profits.

As direct marketers continue to hone their database distributions by means of mailing lists generated using demographic inputs primarily taken from credit card users, the number of actual catalog print runs has decreased.

Marketers of apparel, computers, novelties, and sports and leisure equipment are the main groups comprising catalog publishing. Each has put larger amounts of money into database management, and less into actual print buying on a per-issue basis. The actual number of catalogs has been rising, but not necessarily because of this group.

Catalog volume up

In reality, growth in catalog publication volume is coming from the Internet. Here, e-commerce retailers have generated billions of dollars more in sales over the past five years, much of it in catalog form. They are discovering that follow-up mailings to buyers and "unique visitors" alike generate even more sales.

The high-end players, like antiquities and big-ticket items, actually generate new sales from those who trust buying from a printed catalog rather than via cyberspace. This new group of catalogers is likely to drive the entire publication paper business, though newsweeklies should do well, too, given the new political landscape.

On-line paper procurement

Transactions of paper products via the Internet amounted to less than 1% of all paper and paperboard bought and sold in the U.S. Some new paper-buying Web sites have already burned out, either by changing their business model or merging with similar or complementary services.

Most of these sites used similar models, and expected the buyer and seller to just show up after some initial marketing and sales efforts. These "open" marketplaces were set up either for auctions or trading, but not enough volume was generated to make them worthwhile.

PaperExchange.com, paperX.com, and several others launched with much fanfare, but have already transformed themselves into something more broad and information-based. PaperExchange, which now is more information-oriented, recently acquired BoxDirect, a resource for corrugated boxes and related services. paperX, which had some initial success in Europe, is now more of an Internet-in-a-box solution for the thrifty paper maker and distributor.

An open, public exchange is a rather simple service to provide. Sites like The Paper Site (www.papersite.com) and The Secondary Fiber Exchange (www.sefex.com) pioneered this type of service with very modest resources several years ago, and carved a small piece of transactions primarily to the odd-lot customer or daily bidders of paper.

PaperLot.com uses a similar model, but with a small group of distributors. There also exist the "pure information" sites, which also are morphing into exchanges and auction houses as an outgrowth of their directories and information services.

Private exchanges

One business model that seems to be surviving is the private exchange. The automobile, construction, and steel industries began with the private exchange model, and volume growth of transactions is building steadily.

Many of the open, public paper exchanges have begun migrating to a private exchange model, which was started by Paperhub.com, among others. Paperhub sees the major strengths of the private exchange model as being able to correct the two primary inefficiencies within the paper and print supply chain: invoice mistakes and information bottlenecks.

Says a Paperhub representative, the private exchange model corrects errors and redundancies in invoices by providing one steady stream of invoices to all members, available through a consistent interface. Second, to help information flow more smoothly, Paperhub uses an industry-standard markup language called PML that offers same-day information exchange between its members and their suppliers or customers.

As long as the order placement is uniform and accurate, volume is expected to grow as members see its utility.

Paperhub says that its consultative approach with industry IT and management helped to solidify its membership base. The company also says that it isn't interested in just any area of growth, only the efficiency improvement of the paper supply chain.

On-line design

New on-line paper entities include sites that offer design services. Giving paper buyers the ability to easily design a new sheet, "print" paper on line, then drive that information through material procurement is a true measure of efficiency.

Here, set-up is accomplished to meet job delivery, and production begins immediately upon the arrival of material. Savings are captured in reduced inventory costs, less waste, and lower idle and set-up times.

A few sites introduced this concept in 2000, and more are on the way. Design choices and related materials are organized so that cost and function are monitored throughout the process.

Various other design and document management tools such as those from Arborex, BoxWare, and Sarbrook have been available for years. A new entry is Paxonix, a collaborative effort led by Westvaco Corporation and a variety of best-in-class member contributors. Paxonix seeks to promote in-house product development and project management for its customers and member companies.

The sourcing service, which is not a procurement function, matches need with capability (materials have been pre-qualified). The company plans on offering updates of materials and libraries on a continuing basis.

Information, consulting

Paxonix has established vast libraries of public and private information, on- and off-line consulting services, and project management capabilities. Custom design capabilities using templates, private branding, and logo graphics along with a host of other graphics and text can be generated in 3-D prototypes and coordinated with project management to provide the total virtual workflow-immediately transferable to a real-world job.

The initial target is the converting and packaging industry, but the direct mail and publishing industries are likely to follow.