In the labels market, prime labels are the prima donnas. Prime labels, such as those found on shampoo bottles or soy sauce, are placed on product packages as the main identifiers. They carry important information about the product, including brand identification, contents and usage information. But they also act as marketing pieces, luring shoppers to purchase that product. Most prime labels are 4-color, and some include special effects, such as foil stamping and embossing.
Marc Yoder, vice president of Yoder Graphic Systems Inc., a distributorship in Akron, Ohio, knows the prime label market is lucrative. He sold 4-color process labels with custom diamond-shaped die cuts to a toy manufacturer for placement on one of its toy packages. The labels included the name and picture of the toy and an illustration of its use. The company ordered 50,000 of the full-sheet size labels.
But Yoder prefers selling industrial and shipping labels, the workhorses of the label world. "We sell more grunt labels," says Yoder. "There are lots of companies going after the prime label business. I've found less competition for industrial labels, shipping labels and drum labels." And selling these labels can be profitable, too, if you help a client solve a problem.
One of Yoder's customers is a manufacturer of paints and chemicals. The company needed a label for recycled plastic drums used to hold the materials. The president of the company requested a removable label, so it could be readjusted if it was applied crookedly. After extensive testing of label stocks and adhesives, Yoder supplied the firm with EDP labels with a FASSON brand removable adhesive. The labels, imprinted with lot numbers for the drum contents, can be removed for about a day, then the adhesive becomes permanent. The application was such a success that the client now orders about six different labels with this stock and adhesive for various containers. It orders between 20,000 and 40,000 labels every six months.
These drum labels may not be as glamorous as prime labels, but they are still a moneymaker for Yoder Graphic Systems. "The cost of the label wasn't as important as the performance," says Yoder.
Thermal Transfer Opportunities
One of the hottest niches in the label market is another member of the working class eschewing image for functionality-thermal transfer labels. These labels usually are imaged at the client's location by a heated printhead that contacts a ribbon coated with thermal ink. This causes the ink from the ribbon to transfer onto the label and create an image. If clients require bar codes or other variable data on their labels, then thermal transfer technology is often the ideal choice.
"The best opportunity for distributors is in thermal transfer labels," says Tim Logan, president of DataPro Inc., a distributorship in Huntsville, Ala. In the past three years, DataPro's label sales have increased 150 percent. Last year, the company sold $280,000 worth of labels, the majority of which were thermal transfer labels. Many were stock labels, although some clients order custom labels with logos or special perfs.
One of DataPro's customers is a frame manufacturer. The company sells prints to home decoration stores, such as Pier 1 Imports, and manually frames the prints. DataPro supplies the company with blank thermal transfer labels with a vertical perf. The company images the labels using Intermec printers, adding bar codes and other retail information. Workers place one part of the label on the back of the print, then they frame the print. Next, they place the second part of the label on the back of the framed artwork.
Logan says independent distributors have a great opportunity in the thermal transfer market because they can often beat pricing offered by larger companies. "If companies buy labels from equipment manufacturers, such as Intermec, Zebra and SATO, they'll pay a whole lot more," says Logan.
Frank Flandreau agrees. Flandreau, president of Forms & Supplies Unlimited Inc., a distributorship in Sanford, Fla., has been selling thermal transfer labels for almost a decade. "A lot of equipment manufacturers try to lock customers into service agreements that include labels and supplies," he says. They often charge high prices for these consumables, he adds.
Flandreau remains competitive by selling equipment and supplies, such as ribbons. In addition, his company warehouses products, ships them on demand and services equipment through agreements with equipment manufacturers. "For distributors to stay competitive in the thermal transfer market, they have to sell equipment, supplies and services," says Flandreau, whose largest client buys millions of labels each year.
Logan competes with larger companies by employing some of the same marketing techniques they use. For instance, he offers free printheads to customers who place large orders. But the main reason DataPro is successful, says Logan, is because the distributorship caters to customers' needs. "You have to assure customers that you can take care of them," he says. "Find the right person to talk to, and get them to show you the applications. If all you're doing is going in and quoting a label order, you're probably not going to get the business. Even if you do, you'll just drive the price down." Logan meets with the employees who use the labels, talks with them about their needs and sells them solutions that fit their operations.
Tips for Tapping into the Label Market
Yoder provides labels to several companies that sell aerosol cans or bottle contents, such as paints and adhesives. Most of these companies order between 10,000 and 100,000 labels a month. They are printed in 4-color process and include the product name, contents and safety warnings. The labels, printed on C1S stock, generally measure 81/2 x 10 inches and wrap around the cans. Unlike many labels, these do not include an adhesive coating: They are ungummed labels. Bare cans and bottles are placed on an assembly line, adhesive is applied to the labels on the assembly line, the labels are mechanically applied to the bottles and cans, and the end products are placed in shipping boxes, usually in groups of 16.
Yoder says the challenge is providing a quality printing job that adheres to clients' strict standards. Many manufacturers require vendors to submit to compliance labeling programs, in which the companies set labeling specifications to make their operating methods more efficient. Yoder's bottling customers dictate numerous requirements, including the size and weight of labels, the amount of white space necessary for overlap when the labels wrap around the bottles and cans, and the number of labels that must be packaged together. Satisfying these label customers can be difficult, but Yoder says it's worthwhile. Labels are a profitable market.
If you'd like to pursue the labels market, consider these tips:
· Market yourself as a label specialist. Many distributors sell themselves as a one-stop shop for business printing. Yoder discourages this approach with some companies. They may think your firm spreads itself too thin. If they require lots of custom labels, they may not view your company as label specialists. "You can sell labels as your specialty and be successful," says Yoder. "For many of my accounts, labels make up the majority of our business. We're viewed as a specialized vendor for labels and tags."
· Pitch products to the right people. "Purchasing agents aren't as likely to change vendors," says Logan. "But a manufacturing director, or someone who uses the labels, will." Flandreau's contacts are often employees in warehousing or shipping departments.
· Don't settle for stock labels. Many companies request stock labels for shipping, inventory tracking and other functions. Although stock labels may be satisfactory for internal applications, suggest that firms improve their image with custom labels for any applications that leave their premises. Clients may add their logos, corporate colors or custom die cuts to labels. "Talk to the customer, and show them how much better a custom label would look," says Logan.
· Sell combination products. Just as fast food restaurants sell combination meals, you can market combination products. For example, you may sell a shipping label that also functions as a packing list. Or perhaps a client uses different labels for marking inspected products "accepted" or "rejected." You may suggest one label with check boxes for marking the inspection result.
· Search out all the label opportunities. "You don't realize how many labels companies use," says Logan. "Every box that goes out of a company probably needs a label." One of Logan's clients is a wholesale grocer that orders continuous picking labels to place on products. Aside from this bread-and-butter product, Logan supplies the grocer with other labels. For example, he provides product labels that are placed on metal grocery store shelves.
· Make a beeline for bar coded labels. With the proliferation of bar coding systems, the need for bar coded labels has increased. To remain competitive in the labels market, particularly if you're selling thermal transfer labels, you must understand and offer bar coded products. Flandreau's largest customer, a distribution services company, orders millions of bar coded labels a year. The labels contain several bar code symbologies, depending on the application, but Code 3 of 9 is the most common one.
· Test first or pay later. Test labels, ribbons and other consumables on any equipment they'll be processed on, including printers and bursters. In addition, make sure label adhesives, stock and liners are sufficient for the application. If you don't test labels first, you may find yourself eating the costs of a defective label run later.
