One thing is for sure when you decide to mail a catalog: You’re going to need to buy paper. When you first start out in the business, you may opt to buy paper from your printer because you don’t know what you’re doing, and because it makes sense when buying smaller quantities. Even as you grow your business, you may opt to stick with buying paper from the printer because you’re happy with the service, pricing, and convenience. But there are other sources depending on your level of volume and your needs.
Catalogers have three basic options when sourcing paper: purchasing it from a printer; going through a paper broker, who negotiates with paper mills on your behalf; or buying directly from a paper mill. According to various professionals in the paper industry, buying mill direct is an option only for catalogers with massive volume. Small catalogers are more likely to purchase paper through a printer, and the majority of catalogers that fall into the midsize range opt to use a paper broker.
Opinions vary as to what constitutes a “large” or ‘small’ cataloger, however. Terry Monahan, a sales representative for New York-based paper brokerage Bulkley-Dunton Publishing Group, defines a small cataloger as one that prints no more than five times per year, mailing less than 1 million catalogs annually. A midsize cataloger, she says, buys at least 2,000 tons of paper a year and prints six to 10 times a year, for a total of about 1 million-10 million catalogs annually. A large cataloger, such as Freeport, ME-based apparel, outdoor gear, and home goods merchant L.L. Bean, can use 20,000-30,000 tons of paper a year for more than 10 million catalogs annually.
But volume isn’t the only factor to bear in mind when deciding where to source paper. Logistics, efficiency, tsrvice, and satisfaction play a part too.
PARTIAL TO PRINTERS
Sarah Fletcher, creative director for Charlestown, RI-based consultancy Catalog Design Studio, says that the smaller the catalog, the more it has to rely on its printer to get the best paper price. This means that “the little guys are at the mercy of their printer,” she concedes, “but there is more wiggle room and a lot more advantages with a printer to find out what’s available.”
Westfield, WI-based plants cataloger Prairie Nursery has bought its paper through its printer for 23 years, says its president Neil Diboll. Doing so “keeps it very simple,” he says. Prairie Nursery prints about 100,000 64-page catalogs a year, with drops in winter, spring, and late summer.
Jay Lecher, paper sales manager for Sussex, WI-based Quad Paper Services, a division of printer Quad/Graphics, says that using a printer to source paper “takes the ease of administration off the cataloger’s plate.” Because they buy major quantities, most printers buy directly from the mills. “And given that our platform is set up with a fairly large group of buyers, we have what we consider to be very good market intelligence of where the best opportunities are for our customers for every grade of paper we buy,” Lecher adds. “We deal with all the logistics of the purchase order and take full responsibility for all facets of the paper and for all its performance issues.”
Buying from the printer also gives a cataloger flexibility regarding last-minute changes as far as amount of paper required. Printers typically have a vast inventory of paper on hand to “make things happen in a pinch,” Lecher says, whereas a broker “doesn’t necessarily have the speed internally to do that. We can quickly figure out what the best mill might be for a particular job, considering the plant location in regard to the mill or what paper remedy we can come up with based on a trim, page count, quantity, or drop-date change. The payoff in the end is to offer the most flexibility when it comes to paper without anyone getting hurt with leftover inventory.”
Indeed, says Jim Padgitt, president of Mount Pleasant, SC-based catalog consultancy Direct Marketing Insights, one of the advantages for smaller catalogers that buy paper through their printer is that if they don’t use all the paper, they don’t own it. “It’s the printer’s responsibility to get rid of it. If there is a problem in the running or a bad batch, if the cataloger owns the paper, those charges are incurred,” Padgitt explains.
But the benefits that printers can provide come at a price. “The printer will mark up the paper because they’re putting their money out early on behalf of the customer,” says Tom Hansen, vice president of marketing and publication papers for Elk Grove Village, IL-based paper brokerage Bradner-Smith & Co. “That is understood. To what degree they mark up the paper is one consideration.”
Janie Downey, president of Cumberland, ME-based production consultancy PublishExperts, says a printer’s markup on paper is typically 2%. “It’s a negotiated number, so everyone’s will be different,” she adds. “The standard in the past has been 2%, and I’ve seen it as high as 5%.”
And apparently printers are trying to offer more-competitive pricing. After all, Lecher says, “lower paper prices ultimately mean our customers will print more. It benefits us that our prices are always competitive. As time goes on, catalogers in particular seem to be running with leaner staffs, making the whole printer supply channel beneficial as long as the comfort and trust is there.”
If you buy paper from a printer, calculate how much paper you need to actually run your job, then compare this with the printer’s estimate. Ask how much waste is planned into your work. Bulkley-Dunton’s Monahan points out that some of the waste is planned for press; some is planned for the bindery. If you have complex bindery instructions, expect that your paper waste will be higher. Work with your printer to try to lower the amount of paper you need to run your job.
BROKER BENEFITS
While many midsize catalogers opt to buy paper through a broker, it’s tough to pin down a size or consumption level at which it makes sense to opt for a broker over a printer. Downey says the old rule of thumb used to be that if you were buying 3,000-5,000 tons of paper, “you could be buying it cheaper on your own than through a printer, and by ‘on your own’ I mean through a broker.”
Jacksonville, FL-based swimsuit and sportswear merchant Venus Swimwear has published catalogs since 1984. “We’ve been using a paper vendor for over 15 years,” says Rich Atlas, director of direct mail and e-commerce marketing. “We feel very comfortable that they’ve been attentive to us. We need to take advantage of that.”
The company, which prints more than 30 million catalogs a year, “is close to being mill direct, but we’re not there,” Atlas says. And given pricing increases of the past few years, “we have felt it’s less risky to maintain a good relationship with paper vendors who are then known to maintain good relationships with the mills.”
Jeffrey Hintz, vice president of Upper Saddle River, NJ-based brokerage Clifford Paper, worked for a printer for 14 years, “so I’ve seen both sides of this equation.” Yes, it’s one-stop shopping if you buy through the printer, he says. “But if you buy through a distributor, we shop this piece of business around to various mills. A lot of people are comfortable with that. We can negotiate long term, short term, or for a spot job. Not all mills have all grades of paper. We source it to the mills that suit the needs of a particular cataloger.”
Purchasing paper through a merchant or broker, Hansen of Bradner-Smith says, “gives catalogers maximum flexibility.” The broker coordinates deliveries and assists catalogers as far as the amount of paper needed; it also manages the inventory on behalf of the cataloger. And even companies that are theoretically large enough to buy mill direct use brokerages, he says, because not all paper mills are set up to handle the administrative tasks associated with fulfilling individual orders and shipments.
Beverly, MA-based women’s apparel cataloger/retailer Appleseed’s, which buys about 10,000 tons of paper a year, uses a paper merchant. “When you’re smaller, it is easier to go through a printer,” says director of print production Maura Lyons. “I’ve been more successful with getting more aggressive pricing through a merchant, and the merchant might be able to go to bat a little bit harder for you. We always look for quality, price, terms, and service. All those things have led us to stay with the paper merchant. Mills are less likely to extend you terms. Brokers/merchants are willing to negotiate and come up with terms for payment plans and contract duration.”
DIRECT FROM THE MILL
Many catalogers simply don’t have the volume to justify buying from a paper mill. “If you’re a Harry and David, a Lands’ End, or an L.L. Bean, you probably have a department that deals with paper buying, and they buy it by the trailerload for the very best price,” says Direct Marketing Insights’ Padgitt. “Then it’s worth it to go mill direct.”
Boston-based Sappi Fine Paper deals exclusively with paper brokers and the larger catalogers. Daniel Dejan, Sappi’s national print and creative specialist, says a cataloger’s needs are “quite large and extremely time sensitive.” A truckload of paper is about 40,000 lbs., “and for that type of volume we would immediately look into volume discounts for the customer,” he says. “You have to have that personalized service to bring the most efficiencies to a cataloger.”
“No two scenarios are alike, and every negotiation is different,” says Clifford Paper’s Hintz. “Can you buy paper cheaper going direct from the mill? I think that would depend on the mill you approached, are you positioned with the right mill, are you able to meet their financing requirements, are the logistics favorable between the mill and printer, etc. There are a lot of moving parts.”
It’s not surprising that a paper broker would argue that buying mill direct isn’t always the cheapest option. But PublishExperts’ Downey also says that there aren’t any clear-cut answers or any sort of typical pricing chart when it comes to specific cost savings for various paper sourcing options. “It’s not logical,” Downey says. “If it were, you would think that if I cut out a middleman I should be able to buy paper cheaper. But it’s not. I’ve seen where buying paper mill direct can be more expensive.”
“The perception is that dealing directly with the mill saves money,” says Bradner-Smith’s Hansen. “The reality is that when you factor in all the costs of managing and other considerations, it may or may not be cheaper.”
One problem, Padgitt says, is that the potential cost savings through mill-direct purchases don’t offset the potential for mechanical breakdowns or labor problems at a mill. A strike at a mill, for instance, could leave a cataloger in the lurch.
“The minute you own the paper, certain elements of flexibility are gone,” Padgitt says. “Inhouse expertise is essential if you own your own paper. If you don’t have internal expertise or knowledge, you can make big, big mistakes. It’s relatively foolish to own paper without having the resources to manage it.”
If a cataloger wants to buy paper direct through a mill, Bulkley-Dunton’s Monahan says to “look for the mill’s sweet spot,” or the grades it specializes in and makes a profit from. “Otherwise, if the mill makes a commitment to make something that is not as profitable for them, as things get busy or paper is in short supply, the mill is going to want to drop your business and/or raise your prices,” Monahan explains.
Another tip for those opting to buy paper through a mill: Select one relatively close to reduce fuel surcharges on deliveries, Monahan says. You should also plan to visit your mill to develop a relationship “so that they understand the quality and basis weight you need for your brand.”
Monahan also advises catalogers to set up long-term agreements. Negotiate caps for paper price increases as far out as you can; also negotiate paper-handling fees and storage charges, which can run $0.25-$1.50 per hundredweight (cwt).
THE INTERNET AND BEYOND
A few years ago, some industry watchers thought the Web was going to be the future of paper buying. But while catalogers can technically buy paper via Web portals and online auctions, it remains an uncommon choice. Mike Conran, who owns Oakland, CA-based Go2Paper, an online provider of e-business tools and services for the global paper industry, says catalogers often use his company not to buy, but to sell excess inventory. (See “Selling paper online,” above.)
“I’ve never done any paper purchasing online,” says consultant Downey. “And I don’t have clients who do this.”
But the Internet has provided catalogers with a greater ability to research paper prices and suppliers. For instance, Los Angeles-based ForestWeb, a portal for the forest products industry that launched in January 2000, provides paper pricing and other industry information catalogers can use to shop for better deals or to negotiate with suppliers.
When all is said and done, perhaps Quad’s Lecher sums up best how catalogers should consider their paper sourcing decisions. “Customers do jump around,” he says. “In the end, it goes back to who you trust and who you feel comfortable with.”
But catalogers and publishers should realize that the supply landscape is shrinking, and mills are under tremendous cost pressures themselves, says Courtney Wemyss, director of merchant national accounts for catalog and magazine distribution for Stora Enso North America, a paper mill in Wisconsin Rapids, WI. “There have been a number of [mill] closings in Canada. Hopefully, everyone is paying attention and aligning themselves with the proper people.”
PAPER RESOURCE GUIDE
Not a comprehensive guide, but a selection of mills, brokers, and printers that sell paper to catalogers
PAPER MILLS
BOWATER COATED & SPECIALTY PAPERS
803-981-8770, www.bowater.com; grades include #4 web coated, #4 coated gravure, #5 web coated
CASCADES FINE PAPERS GROUP
450-569-3915; www.cascades.com; grades include #4 web coated
FRASER PAPERS
207-523-2356, www.fraserpapers.com; grades include #5 coated offset, #5 coated gravure
INTERNATIONAL PAPER
203-541-8000, www.ipaper.com; grades include #4 web coated, #4 coated gravure, #5 coated offset
KRUGER
514-343-3100, www.kruger.com; grades include #5 coated offset, #5 coated gravure
MYLLYKOSKI CORP.
203-229-7400, www.myllykoski.com; grades include #4 coated groundwood, #5 coated groundwood
NEW PAGE CORP.
937-495-3586, www.newpagecorp.com; grades include #4 web coated
NORSKE CANADA
604-654-4000, www.norskecanada.com; grades include #5 coated offset
SAPPI FINE PAPER
617-423-5400, www.sappi.com; grades include #4 web coated
STORA ENSO NORTH AMERICA
800-322-7377, www.storaenso.com; grades include #3 web coated groundwood, #4 coated offset, #4 Web coated groundwood
TEMBEC COATED PAPER GROUP
514-397-3923, www.tembec.com; grades include #4 web coated groundwood
WEYERHAUSER CO.
803-802-7500, www.weyerhauser.com; grades include #5 coated groundwood, #5 coated groundwood chlorine free
PAPER BROKERS
BRADNER SMITH & CO.
800-678-1852, www.bradnersmith.com; papers from Abitibi Consolidated, Stora Enso, West Linn Paper Co.
BULKLEY DUNTON PUB. GROUP
212-863-1800, www.bulkleydunton.com; papers from Abitibi Consolidated, Cascades, International Paper
CLIFFORD PAPER
201-934-5115; www.cliffordpaper.com; papers from American Eagle, Appleton Coated, Georgia Pacific
DOMTAR DISTRIBUTION GROUP
514-848-5234, www.domtargroup.com; papers from Port Edwards, Port Huron
FRANK PARSONS
301-386-4700, www.frankparsons.com; papers from International Paper, Mohawk Paper Mills, Tembec
HORIZON PAPER
866-358-0855, www.horizonpaper.com; papers from Bowater, Kruger, Stora Enso
OLMSTED-KIRK
800-367-6526, www.okpaper.com; papers from Neenah, Stora Enso, Wausau
STRATEGIC PAPER GROUP
888-741-1400, www.strategicpaper.com; papers from Sappi Fine Paper, Stora Enso, Tembec
WADE PAPER CORP.
847-940-9777, www.wadepaper.com; papers from International Paper, West Linn Paper Co.
WEBSOURCE
212-255-1600, www.websource-paper.com; papers from Kruger, Mohawk Paper Mills, Tembec
PRINTERS
A & J PRINTING
417-725-2674, www.andjprinting.com; papers from Boone Paper, XPEDX
ARANDELL CORP.
262-255-4400/800-558-8724, www.arandell.com; papers from International Paper, Sappi Fine Paper, Stora Enso, Weyerhauser Co.
BANTA CORP.
920-751-7777, www.banta.com
CATALOGS AMERICA
800-283-4666, www.catalogsamerica.com; papers from Bowater, Domtar, International Paper,
LANE PRESS
800-733-3740, www.lanepress.com; papers from New Page, Sappi Fine Paper
THE NEW HERALD PRESS
401-724-0200, www.newheraldpress.com, papers from Lindenmeyer-Monroe, Mill Marketing
PERRY JUDD’S
800-737-7948, www.perryjudds.com
QUAD/GRAPHICS
414-566-6000, www.qg.com; papers from Bowater, International Paper, Stora Enso
QUEBECOR WORLD
514-877-5317/800-567-7070, www.quebecorworld.com
RR DONNELLEY
312-326-800, www.rrdonnelley.com
U.S. PRESS
800-227-7377, www.uspressdirect.com
PAPER GLOSSARY
AQUEOUS COATING
Coating applied to pages after they’ve been printed that helps prevent the ink from rubbing off and that can give the paper a matte or gloss finish.
BASIS WEIGHT
The weight, in pounds, of a ream (500 sheets) of paper cut to the basic size for that particular paper grade; also called ream weight.
BLEED-THROUGH
When an image from one side of a sheet of paper is visible on the other, often due to a lack of opacity in the paper; also called show-through.
BRIGHTNESS
The percentage of light that is reflected from a sheet of paper; the brighter the paper, the greater the contrast in the images.
CALENDER
To press paper between rollers during the manufacturing process in order to create a smoother product.
COATED FREESHEET
Coated paper containing no more than 10% groundwood pulp; the low groundwood-pulp content makes it whiter, heavier, more durable, and more expensive than groundwood.
COATED GROUNDWOOD
Coated paper containing 10%-75% groundwood pulp
COATED PAPER
Paper whose surface has been treated with a mix of pigment and binders (such as starch and latex) to improve its quality.
CWT
Abbreviation for hundredweight.
DENSITY
A paper’s weight in comparison to its bulk.
FREESHEET
High-quality paper that’s free of or almost free of groundwood pulp.
GRADE
Quality of a paper based on its contents and method of manufacturing.
GROUNDWOOD PULP
A mechanically produced wood pulp used to make inexpensive grades of paper; also called mechanical pulp.
MILL BRAND
A paper’s brand name.
OPACITY
The amount of bleed-through (or lack thereof) of a piece of paper.
POSTCONSUMER WASTE PAPER
Paper that was disposed after reaching the end user, such as discarded newspapers and stationery.
PRECONSUMER WASTE PAPER
Paper that was disposed of before reaching the end user — for instance, the trimmed ends of a catalog before it is mailed.
SELF-COVER
Use of the same type of paper for the cover as for the inside pages.
SIGNATURE
A folded sheet of paper that consists of a set number of pages. All signatures are multiples of four, with 16-page signatures the most common; also called forms.
SUPERCALENDERED (SC) PAPER
Paper that is calendered between alternating chrome and fiber rollers, making it smoother and glossier than ordinary calendered paper.
VIRGIN PAPER
Paper with no recycled content.
Selling paper online
Though catalogers aren’t using the Web to buy paper, many are using it to sell excess paper to brokers, printers, and publishers.
Oakland, CA-based Go2Paper is one such online marketplace. “All [a cataloger has to] do is register on the site and click the ‘sell paper’ link,” says owner Mike Conran. “They fill out the form, and their paper is posted immediately on the Website for buyers to view. It’s free to post as much inventory as they like, and we get paid by the seller if they sell the paper.”
Sellers can post the paper for a nonnegotiable price, for a negotiable price, or for auction. The most popular option is the negotiable price, Conran says. “In most cases, a cataloger will make as much as 30% more on their paper [than they’d expected] because we offer many more potential buyers looking for paper.”
Go2Paper has 6,000 members, including printers such as Quebecor World, Quad/Graphics, RR Donnelley, and Cenveo; mills such as Abitibi, Catalyst, and Stora Enso; and brokers such as Clifford Paper.
“These companies use our marketplace to buy and sell paper inventory,” Conran says. “Our other technology is a supply chain paper order management system called PaperManager. Paper is generally 50% of the total cost of the job and is being managed by spreadsheets until now.” This allows paper buyers to order their paper and manage inventory with their printers and suppliers, he says. Customers include The Home Depot, Target, and Gottschalks.
— JT