Succeeding as a Contract Garment Printer
Learn the advantages of contract printing and the challenges screen shops face in satisfying customers.
I have a special affinity to contract screen-printing work. After all, this is the niche my own screen-printing business was set up to serve. Over the years, I took several forays into custom screen printing and into the subset of producing preprint/custom lines. But inevitably, I always ended up back in the familiar world of contract printing.
A contract screen-printing business is similar to a movie crew. The filming of the movie involves actors who do their work in front of the cameras, as well as production people who work anonymously and inconspicuously behind the scenes. Contract screen printers are the anonymous, inconspicuous equivalent of movie-production crews, working in the background to deliver the products that the end customer sees.
Of the screen-printed garments you are likely to come across in retail environments, more are produced by contract printers than you might think. Unlike custom printers and preprint decorators, who do their work right out in front, directly interacting with the end user of the garment, contractors rarely come into contact with the final garment buyer. In fact, the final consumer rarely has any idea that the contractor exists.
Contract printers do not sell a product. Contract printers sell decorating service--the service of their printing equipment and the expertise required to operate that equipment with a timely and quality result. The contracting printer's customers are the ones responsible for selling the finished garments to the end consumer.
The attraction of contract printing
In a nutshell, the main benefit of serving this sector of the textile screen-printing market is that it can lead to a steady and constant flow of production for your printing facility. Each contract account you secure acts almost as a separate sales group for your company, a rep group that feeds new orders into the mouth of your production machine. And you get the benefits of these rep groups without worrying about the care and feeding that reps would normally require.
It seems that everyone in the custom screen-printing business has seasonal cycles. Not so with contract printing, unless it's by your own choice. (For example, my business presently focuses almost exclusively on one contract market that follows the school year.) To even out your production, you can pick and choose contract customers based on their own particular seasonal needs, then use these accounts to build a portfolio of customers whose work meshes into twelve months of steady business for your operation.
Another benefit to contract printing is that you avoid having cash tied up in inventory, or worse, having money locked up in product that hasn't sold my as well as you had expected. In other words, you avoid having goods sitting idle and taking up your valuable warehouse shelf space.
The most significant drawback to contract printing is that you only earn revenue based on a "per print" price. You can't pad revenues by marking up the price of the garments because the garments are typically supplied by the customer. More about this later.
I've printed for major corporations and theme parks, every fraternity and sorority in the country, and each of the teams in the National Football League. But I've never once called on any of these accounts personally. Remember, the contract printer is the anonymous, inconspicuous decorator, while his customers are out there representing themselves as the creator of the product coming off the printer's dryer belts.
The contract printer's customer is basically anyone who has access to garments but has no direct access to a printing facility or equipment. As an aside, most contract customers have little interest in being involved in the production end of the business. The bulk of these buyers are involved in some form of finished-goods sales, many of them doing business as advertising-specialty distributors.
Basically, contract customers are a conglomeration of salespeople who rely on others to produce their finished product, but are savvy enough to understand that they can buy T-shirts, sweats, jackets, and caps just as easily as a printer and from the same sources. They can buy the substrate, but they need the contract printer to provide the printing service.
Contract customers come right to the edge of doing the job themselves. They often show up at the printer's facility with garments and, frequently, art in hand. I've seen many of these customers show up on my doorstep with not only the garments in tow, but with a manila envelope filled with correctly produced film positives. In these situations, I was able to skip right to the step of screen preparation and get the job up and running very quickly.
Outside of ad-specialty customers, contractors find business from retailers and catalog companies who operate in much the same way as their ad-specialty counterparts. What sets these customers apart is that their jobs typically represent higher volumes, leading to even better consistency of product flow for the printer.
Ad-specialty distributors might be competing with regular custom printers who sell direct, and they are therefore on the same roller coaster when it comes to order frequency. Retailers, on the other hand, have their own outlets for selling printed goods directly to the final consumer. This means they can enjoy greater regularity in their ordering cycles. Even if your customer is a retailer who has seasonal peaks and valleys, you can anticipate these fluctuations year to year and plan accordingly by finding other customers to keep you busy in these slower times.
A contract customer may involve you in projects that are akin to fulfillment programs, where you will decorate from a catalog of standardized graphics repeatedly, meeting prescheduled deadlines and drop-shipping the finished garments to locations predetermined by the customer. In the world of contract printing, these sorts of fulfillment programs may represent fairly short runs, but the frequency of orders can make up for the lower per-order volume.
Another popular revenue stream for contract printers involves printing overflow work for local custom screen printers. The drawback with this sort of business is that the orders can be frequent and substantial, then dry up suddenly.
I've done overflow work, and I've purchased plenty of overflow work from other contractors. One thing I've learned from these experiences is that when the original printer's flow of orders slows down, the contractor's flow of orders squeals to an abrupt halt.
Overflow work is very good when you can get it, but I've seen contractors go belly up when they depended on this type of work exclusively. Non-printer customers will always need your service, even when their own sales are lean. But the custom printer sending you his overflow has all the tools he needs to take all his business from you without a moments notice.
Be cautious of working both sides of the fence. I'm talking about being a contract printer and also a custom printer at the same time, a two-dimensional printer who is out there bidding on work against all competition. People who use contract printers, especially ad-specialty distributors, are wary of printers who also sell direct to customers. The obvious fear is that you will decide to go to the final customer, explain that you are already doing the printing for them, and steal away the account.
You, as a contract printer, have all the tools to accomplish the complete job, while the ad-specialty rep has only their sales ability and rapport with the customer to offer. If you do operate as both a custom and contract printing business, make sure to keep your custom markets widely separated from the markets that your contract customers are calling upon.
A final comment I'd like to make about contract printing involves customer service. As a contract printer, you need a whole different structure of customer service than you do if you're serving a custom-printing market. As a contract printer, you rely on repeat business from customers, who, more often than not, are educated buyers. As a result, you'll spend less time on the basics (e.g., why there is a setup charge) and more time discussing your capabilities and production schedule.
Don't get me wrong. You still have plenty of customer-service to offer and plenty is expected. But you won't be starting from square one with each order that crosses the transom. Your customer-service department will best serve the customer by knowing the status of each of the customer's orders and the availability of time on the production schedule for future orders.
In such situations, your customer will essentially fill the role of an in-house department. Customer service will communicate information between you and this customer in much the same way as you would share production data with your own sales force. Your ability to be professional and have this information quickly at your fingertips will take your business far in the eyes of your contract customers.
Any tools you use in custom printing to make your business more efficient are doubly necessary in contract printing. Making money in this marketplace is entirely based on your efficiency in completing the job accurately. So it's critical that you have a total understanding of your costs because you have absolutely no wiggle room for error. Because you're not earning $3.00 extra on each T-shirt you sell to the client, you have no way of defraying the costs of downtime or production errors.
Some custom printers view contract printing as unimaginative, uncreative, and unchallenging in terms of relying on unique printing skills. This is far from the truth. In actuality, contract printing usually requires that you have the skill to accurately duplicate the style and execution of other printers (a contract customer may have several printers working on the same order) or to perfectly replicate your own orders time after time, year after year. This means your shop must be able to deliver a wide range of capabilities in order to satisfy a diverse collection of printing applications, such as process color, special effects, high-density printing, etc.
Most importantly, you must be able to maintain good records about the inks, mesh counts, and any special techniques required to produce an order the first time around. If you are doing overflow work for another printer, this information needs to come to you in exacting detail, preferably with samples for you to match against. In my experience as a purchaser of contract printing over the years, I often found it helpful to specify ink brands or supply special ink colors to contract printers.
A major selling point you may be able to offer and emphasize among your contract customers is the ability to warehouse and drop-ship products. From my company in Kansas City, KS, I print for two companies in Indianapolis, IN, whose people I have not been face to face with for several years. Their orders are faxed to us, art is e-mailed, and their blank garments are drop-shipped to our facility. Sometimes the product that arrives for printing is designated for specific orders. In other situations, I carry and track inventory on behalf of the customers, depending on the sales volume they expect to achieve. I then drop-ship completed products under their company names to their final customers.
Arrangements such as these require an earned level of confidence, particularly since your customer ceases to have the option of inspecting each order before their own customer receives the product. This level of comfort becomes a bond that is difficult to break, even when a newcomer tries to low ball a price in an attempt to steal your customer away. Other billable services you might offer to make your company more attractive to potential customers include special packaging, bagging, tagging, and even sewing services.
It's sad to say, but the world of contract printing is driven by the lowest bid price, at least initially. For lack of any other comparative factors in the eyes of many customers, price becomes the first consideration. A contract customer works to create a combined package of purchased garments and purchased printing service, then builds its own profit goals into the order. So, if you're a first-time contract printer that has no history with the potential customer, your bid must be comparable to the prices that the competition is offering if you hope to have a shot at the order. This means that your own efficiency becomes key in maintaining profitability.
When you're seeking new contract-printing business, running an ad in your local newspaper or a commercial on sports radio likely won't generate enough interest to make the promotion worth the cost. Since you will probably work with a limited base of repeat customers, direct contact with potential customers will be your best way to earn business.
Advertising-specialty distributors offer the quickest route to building a customer base. I worked with a screen-printing company not long ago that was inundated with business after it simply cold called all the ad-specialty listings in the local Yellow Pages. Despite the number of screen printers in the metropolitan area, these customers were hungry for more available production time.
Outside of the ad-specialty market, you may earn new business by networking and making direct contact with retailers to see if they contract or have ever considered contracting out their garment-decorating needs. You can either make direct calls or send a simple mailing to make initial contact by explaining the services you offer and your strategy as a confidential behind-the-scenes printer.
A good example of a retail business that used contract printing was one of my first customers. I contracted with a campus bookstore whose owner brought in all her products blank, then contracted out the printing on an as-needed basis. Contract printing gave this customer the flexibility to react to sales fluctuations and top-selling events, such as football weekends, with just the right mix of products and graphics. If graphic 27A sold out and graphic 44B sat on the shelf last weekend, the first could be pumped up for the next weekend, and the latter could be liquidated without taking a loss on a huge quantity of already decorated goods sitting on a warehouse shelf.
Challenges of remaining successful
While price is the primary factor that initially influences customers to buy contract printing from you, quality is the factor that keeps those orders coming back. No amount of discounting will bring a dissatisfied contract customer back your way. And without repeat business, you may as well be another custom printer.
One of the major necessities in contract printing is to build your portfolio of repeat customers who contribute orders regularly and allow you to maintain a smooth and continual flow of production. Profit margins in this market do not lend themselves to the high expense of constantly replacing your customer base with new accounts. The very nature of contract printing almost requires reoccurring orders from a fairly fixed group of customers.
Cash flow is one of the keys to success in the contract world. In this business, you don't have the option of creative financing or floating your business cash flow by including the price and profit from the garment itself in your invoices. You must pay the bills with much lower gross revenue from each order you process. This means you have to keep a close eye on timely payments from your customers, and you may need to adopt a shorter credit window, such as "net 10" terms.
Spoilage is another issue to keep in mind. No printer is ever happy with spoilage on the production floor, but it's a whole different ball game when that spoiled product belongs to somebody else. This is an issue you need to address right up front with your customer. It is essential that you and the customer agree on some allowable spoilage level (usually a percentage of the order size) that will not be charged back to you. A safe number to agree upon is 3%, but as a printer, you should strive to keep it under 1%. If you consistently hold spoilage below the agreed level, your customer is likely to be more understanding when other production problems come up.
Choosing to be a contract printer
Over the years, I spent a great deal of my professional life proudly selling my garments, graphics, and printing expertise to the general public under a colorful company logo with a catchy name and slogan. But thanks to my experiences in contract printing, I now prefer to focus on the basics of screen printing: creating quality work, concentrating on efficiencies, and dealing with educated buyers who are the lifeblood of a successful contract-printing operation. If selling direct to end users has lost its luster, contract garment printing may be a solution for your business, too.