To most end users, little difference exists between the two--whether buying a business card or a paper clip, they tend to view items as necessary business tools, says O'Roke, who was DMIA's 2003-04 president. "Because of this, there is a natural evolution from being the print provider to being the total business product provider for your customer," she says.
That's why O'Roke recently launched the IBG Alliance Partner Program. Distributorships wanting to add file folders, pens, binders, computer supplies and other consumables to their product mixes can ally with IBG, which has been offering such products for 21 years. To compete against the office supply industry's major firms, companies must move a high volume of products to receive competitive wholesale pricing. IBG has built its office supplies business steadily, and the company has been rewarded with exceptional pricing from its wholesaler, O'Roke says
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Once companies become Alliance Partners with IBG, they agree to market the program to their customers. Partners pre-qualify end users and provide information to IBG about their interest in using the distributorship as their primary office supplies source. Upon review of credit information and customer-payment history supplied by Partners, IBG sets up end user accounts with a minimum $500 credit limit. IBG then takes over, showing and explaining its online ordering web site to those firms. Most end users can begin ordering office supplies in less than 24 hours. (See web site, right.)
"We wanted to add office supplies to our product line, but didn't want to make an investment in staff or software to ramp up and work in that market," says Ray Goodson, president of The Landmark Image, a distributorship in Vacaville, Calif. "The value of partnerships is that we can offer a lot more by partnering with specialists." The company has three core competencies--technology, marketing and printing--and its account penetration strategy is based on which ones a customer isn't using.
The Landmark Image has convinced several clients to purchase office supplies from IBG, including a credit union that receives weekly deliveries of products such as toner cartridges, binders and writing instruments. "For customers looking for a single-source solution, the program made sense and was an easy sell," Goodson says. "It's more difficult to get customers already on established programs to switch, but it's possible, especially when a vendor's sales service level slips."
IBG's online ordering system enables users to purchase thousands of items in 15 categories. Users can search for products using item numbers or key words or by clicking on categories and sub-categories. Images appear next to the products. Before users check out via the shopping-cart method, the system guides them automatically to better choices when it knows a comparable product is available at a lower cost. The feature "is the cornerstone of our philosophy of saving the customer time and money by guiding them to the best products available," O'Roke says. Each order is assigned a unique number, which can be referenced during ordering, delivery and invoicing. Also, the end user's purchasing controls can be open or restrictive. Approval limits can be based on order value, contract adherence or budget totals. IBG's operating system, DDMS, is integrated with its web site and with the system of its office supplies wholesaler. The technology allows IBG to handle a large volume of orders with minimal processing costs, O'Roke says.
Partners receive a 20 percent commission on the adjusted gross margin for all orders, calculated by subtracting the product cost of goods (including a freight load) from the sell price. IBG pays the commission on collection, issuing checks by the 15th of the month following the month of customer invoice payment. IBG provides Partners with a monthly Aged Account Receivable Report that details the invoice totals billed to each end user. Instead of sending dozens of invoices for small items ordered, IBG bills end users directly via a monthly summary invoice that's co-branded with the Partner's name and logo. The remit address is IBG's. The summary bill includes a departmental page that lists the total spent for each location and cost center department, and the summary also provides detailed order information by location and cost center.
Each Partner's initial investment of $975 entitles it to 100 general line catalogs and 200 market development catalogs, both of which are co-branded with its and IBG's company names and logos. Each Partner also receives a customized login page specifically for its customers, including a link to its company's home page. At the beginning of each quarter, IBG sends Partners a marketing calendar that lists specials such as year-end deals on filing products. At the discretion of Partners, IBG emails monthly, co-branded sale fliers to end users. Quarterly maintenance fees cover the cost of setting up the customized login page (which takes seven business days), customizing and distributing the fliers (if applicable) and transactional fees.
IBG guarantees to never pursue or accept orders for items that are available from Partners, and customer requests for information regarding items other than office supplies are passed on to those partners. "We respect IBG for its integrity," Goodson says. "Office products are something we'll continue to talk about with our customers."
Thought Provokers
1) Co-branded market development catalogs are key to distributors' sales and marketing efforts. How can your vendors and partners better assist you with training or other assistance, and what can you do for them in return?
2) Once on the industry's periphery, office products are becoming a mainstay line for many distributorships. What other markets on the industry's border should print providers target?
