Big Box vs. Small Box Fulfillment

By Tom Quinn,
Director of Fulfillment Services, Mailing and Fulfillment Service Assocation

The "Big Box" business approach has been the standard approach for the 3PF (Third Party Fulfillment) industry for the last 25 years.   This theory was driven by the client's requirements to store large amounts of material in support of their marketing and sales efforts.  Success within the industry has been measured by the size of a company's warehouse, the number of customers, and the number of line items managed, in addition to their annual revenue and profit.   If you were considered successful, you had to continue to enlarge the size of your warehouse to add the additional materials required for a growing account base.  The bigger a company grew, the larger accounts they could attract and the more material they would have to store.  It was not unusual for a company to double or triple their storage requirements every few years; many times within the same year.  Thus, the"Big Box" theory was created as the 3PF industry was created.  The basis of the theory is that one must have a large warehouse (80,000, 100,000, or 250,000 square feet) to be successful in the fulfillment industry.  I love the "Big Box" theory and have grown up with this business approach, but wonder if another approach (Small Box) might not be the correct approach for others entering the 3PF industry from other business disciplines.  The mailers and printers, particularly small printers and those with digital printing skills might fall into this category.  The"Small Box" approach simply means that the goal would not to be to have a large warehouse, but would be measured in some other method, such as, records processed per year, database size or other computer related parameters, yet to be developed.

Before the argument for"Small Box" is taken any further, it is important to look at the market, which would support such an approach.   The basic applications in support of a marketing organization have not changed and continue to be: sales collateral fulfillment, lead inquiry fulfillment, seminar support, trade show fulfillment, and product or premium fulfillment.  You can add database management, rebate and coupon redemption, returns processing and several other applications to the requirements based on the company and industry supported.  None of these applications represent a significant change from 1981 when I entered the industry.  What has changed is technology in support of these applications, and the realization by the clients that printing and storing large volumes of sales materials may not be the correct approach for markets and economies that change very rapidly.  The impact on the fulfillment industry of the PC, the internet, and other computer driven technologies has been well documented.  These technological advances combined with the improved printing and copying technologies, specifically color printing,  open a whole new window for the entering the fulfillment business.  The"Small Box" approach is driven by a conscious decision on the part of the company entering the industry to identifying applications and clients the have a rich mix of database requirements and mailing, and not large storage requirements.   Many of the large fulfillment providers in MFSA have already seen a shift to a more data driven operations that require less space.  Their clients are utilizing Print on Demand and the ability to transmit a PDF as viable fulfillment methods compared to the traditional print and ship "Big Box" model.  The Print On Demand Application has been utilize for many years with the ability of high speed copiers to produce large documents in small volumes.  This application has been very useful for clients with large technical training and instruction manuals that require update and revision on a constant basis.  The ability to order and ship a PDF has been around for at least 5 years and is becoming more popular as local office printer continue to come down in price and improve in quality.  The biggest impact on marketing organizations is yet to be realized as the capabilities of the color variable printers are further developed and deployed in the industry.   

So how should a company interested in the"Small Box" approach pursue growth in the fulfillment industry?  The answer is to understand those fulfillment applications that have heavy data content and train your personnel to recognize and develop these applications.  The applications that have heavy data are: lead inquiry fulfillment, seminar support, and tradeshow support.

Lead Inquiry Fulfillment – Every company advertises to some degree to develop new prospects for their business.  This particular application is one of the most overlooked applications in the business and is probably the most important application for the future growth of the industry.  If you pursue this application, you will find that very few companies can tell you how many leads they have generated from their various marketing activities in the past year.  Furthermore, even a fewer number will have organized the leads into a formal database for further use.  The 3PF industry can provide their clients with the unique ability to database all leads, respond quickly to inquiries, and disseminate inquiry information to the sales force in a timely manner.  The construction of these client databases will be the basis for the growth of the color variable print industry and will allow your clients to enjoy the high response rates and ROI's expected from the correct combination of data, printing and mailing.

Tradeshow and Special Event Support - The industry has been supporting this application since inception, however, there is more to the application than just getting sales collateral materials to an event.  It does take some special skill to understand what happens at these special events and assuring that the sales support materials get to the right spot at the right time in either a large convention center, hotel or even more incredibly to a field where a balloon race is planned.  Clients are very intolerant of service failures in these situations, because of the cost implications of attending the show and the image impact of not having any sales collateral.  However, there is a very large data component to the tradeshow application.  It happens before the show with processing lists and inviting show participants to the booth, and after the show with thank you packages for coming by the booth.  The data collected from the show is probably more important than the show itself and quick dissemination of the data to the sales force is equally important.  The leads generated from a show are the only way to measure the success of participating at a trade show.

Seminar Support – Many companies utilize seminars as their only selling situation.  This is common among speakers and consultants who provide seminars on their area of expertise with the hope of attracting consulting business and/or the sale of materials, such as books, CD's and other materials.  The first order application is the same as the tradeshow application – to get the right thing to the right place at the right time.  However, the most important aspect is similar to the tradeshow application in that the organization, preparation, utilization and dissemination of data are the single most important aspect of the event.  This application also has a heavy web presence to it because the intent is to drive prospects to the web site to purchase from the shopping cart.

Focusing on these three applications will position your company to be more of a candidate of the"Small Box:" approach to the fulfillment business.  While the"Small Box" approach will reduce the demand for more and more space, it will not change the basic industry requirements of the fulfillment company in the areas of inventory accuracy, reporting and great customer service. The need for a great inventory system still exists and the ability to complete projects on a timely and efficient manner are still requirements of the"Small Box" approach. So my recommendation to mailers, who are the variable data experts of the world and to a special subset of printers, is to consider the"Small Box" approach to fulfillment.  I wish you good selling.