Does web to print inevitably lead to margin erosion?
Last time around we posed the question, is web to print all that it’s sometimes cracked up to be? A key fact underpinning this question is this – how can any on-line service ever avoid falling into a “red ocean” of hyper-competition inevitably leading to falling margins in an attempt to secure market share? The reason? An on-line service in a mature market has no genuine differentiation other than price – and since price is the only way to differentiate, prices will fall. It’s the law of the jungle, the “red ocean” we just mentioned that you can read all about all over the internet.
It’s all very well clever professors like W Chan Kim and Renée Mauborgne talking about “blue oceans” – new, untapped markets, with no competitors, where customers are desperate and will pay anything for the services that you provide – but these markets don’t, in fact, exist.
And it’s also all very well organisations talking about “adding value” instead of focussing on price … but how, exactly, is that possible in an online environment with no direct human interaction? You got it – you can’t.
And it’s not as if the print market is an immature one is it? And it’s not as if there are a tiny number of people offering web to print solutions either. No, we just have to face it, margin erosion is absolutely inevitable.
So that’s it, then, is it?
Well, okay then, we were rather over-egging the pudding back there just to make a point. But it’s an important point, and we have to face it and decide what to do about it.
For starters, an online service doesn’t have to have no differentiators and sell products viewed exclusively as commodities by the people ordering them. The quality of the product(s) on offer, the ease of ordering, the speed of delivery, the after-sales service – all of these are crucial.
But how is this all achieved through a web site? And if it’s easy, surely everyone’s doing it, and we’re back to the red ocean again?
Well, it is possible, but it isn’t easy, and that’s why everyone isn’t doing it, and that’s why – if we can’t exactly reach the purified waters of a blue ocean – we can at least avoid the most shark-infested areas of the red ocean.
And that’s what we’ll be covering next time – how!
But if you can’t wait, then our experts are on hand to help.
We look forward to discussing how to keep sharks down and how to keep profits up!