Printo has shown that catering to the printing needs of micro and small business can be profitable. With an annual growth rate of nearly 35 per cent, the company is looking to touch the Rs. 100-crore revenue mark in the next five years
DIVYA M. CHANDRAMOULI
In an estimated market of US $ 4 billion to 5 billion for quick service printing in India, there are few players who cater to micro and small businesses given the lack of volume. There are fewer still who believe in running a clean business with no kickbacks. “While people readily acknowledge that dealing with the Indian bureaucracy adds to their transaction costs, nobody wants to talk about the corruption that exists in corporate India and when you’re trying to run a clean enterprise, you have to be that much smarter than the competition,” says Manish Sharma, founder-CEO, Printo Document Services (Printo). The company came into being after Sharma’s return to India post a stint in the U.S. which also saw him found a startup in Silicon Valley. “I wanted to get some business cards printed and I had such a shabby experience,” he recalls while adding that he wasn’t even haggling on the price. This had him thinking about serving the underserved in a cost effective manner and given that he was exploring a business opportunity away from the technology space, ironically printing seemed to be an interesting fit. And thus, in 2006, Printo was born in the outsourcing capital of India, Bengaluru. Even though Sharma was a ‘Bombay boy’, he chose Bengaluru given that it was more receptive to outsourcing work to professional setups and also because by his own admission, he simply couldn’t afford to startup in Mumbai. Today, the company has 16 stores in Bengaluru and two more in Hyderabad. By the end of this fiscal year, it hopes to venture into another city. “We are considering Chennai, given its proximity to Bengaluru and the fact that we can process orders out of our existing centralised hub and New Delhi-NCR, given the business volumes that we can tap there,” shares Sharma.
Venture capital guys typically make large bets on unproven models and like to stay invested for a shorter time-period but a physical business like retail needs long-term players and that is why it makes better sense for private equity to fund this space once the business model risk is mitigated
The very centre
Printo’s business follows a hub and spoke model where larger orders are processed at a centralised hub and smaller orders are handled directly at the multiple stores spread out across a city. The company prints everything from business cards and presentations to packaging for consumer goods and standees for corporate events. “A customer can walk in with his/her requirement and choose from our existing design templates. We also allow customisation and levy a design fee that is chargeable on a half-hourly basis to assist customers with their design layouts,” says Sharma. While the company endeavours to provide its customers with quick, aesthetic and quality conscious print solutions, from a customer standpoint, Printo also offers convenience and assured delivery. “We ensure that our print orders are delivered on time and at present, our on-time delivery rate is close to 98 per cent,” says Sharma while adding that the company trains its staff at store counters not to over-promise and under-deliver. At present, nearly 80 per cent of Printo’s business comes from the walk-ins at its retail stores and Sharma shares that a smaller per cent comes from the company’s recently introduced photo merchandise. “We have begun to explore the home, family and gifting segments and we have introduced mugs and t-shirts in this range and will launch our photobooks by the end of next month (Nov. 2014),” he adds.
Larger orders (Sharma says an order of 500 brochures or more would qualify as large) are sent electronically to the central hub and are processed there. “Our larger value customers such as Wipro, Infosys or Microsoft see a different value in us and that is because we have the capacity to address their printing needs comprehensively,” says Sharma. Typically, these companies would have to deal with over 200 separate print vendors, each with different printing specialities but with Printo being a one-stop-print-shop, it eases up the process as their problem is not one of search costs unlike much smaller businesses.
The set up
Printo invests anywhere between 25 lakh to 50 lakh on setting up a store based on size and location. While all its current stores are company owned, it is deliberating over taking the franchise route, especially while rolling out in new cities. There are seven to nine people manning a store and each employee is allowed to interact with clients only after he/she has completed a three month period of in-house training and certification. “We are very focused on our training and all of our department heads, including me, personally conduct training modules. There have even been times when our training batch has been as small as two or three individuals but we never skip this component,” says Sharma while adding that this devoted approach to training has helped the company stay process driven. Most of Printo’s stores have broken even in the first three months to six months of operation, but if a store fails to generate profits, the company waits a maximum of nine months to a year before deciding to shut down the store. “We want to be a profitable business and that means we do not run a single loss making store,” states Sharma.
Sharma’s clear thinking and conservative approach has stood him in good stead, especially in setting out realistic long-term goals. “It has taken me seven years to be in a position to set up two stores in a location such as Whitefield, Bengaluru. Demand for retail services is slow and scattered in many regions across India and tackling this challenge has proven difficult even for bigger retail players,” he opines. Fragmented real estate supply and escalating real estate costs are amongst the other continuing challenges for Printo. While talking of other challenges, Sharma touches upon how Indian retail runs almost entirely on equity whereas in the West there is easy access to debt. Post an intital seed round, in October 2007, Sequoia Capital invested nearly US$ 3.25 million in Printo but Sharma believes that venture capital and retail make for a rocky marriage. “Venture capital guys typically make large bets on unproven models and like to stay invested for a shorter time-period but a physical business like retail needs long-term players and that is why it makes better sense for private equity to fund this space once the business model risk is mitigated,” states Sharma. In early 2013, Sharma bought out Sequoia Capital and ever since, the company has funded its growth through internal accruals.
Big boys club
With Printo, Sharma has shown that with a clear business plan and methodical execution of the same, serving micro and small business is very profitable. The company is growing at a rate of 30 per cent to 35 percent, year-on-year and in the next two to three years, Sharma would like to reprint its Bengaluru chapter in at least three other Indian cities. “We are on track to be a Rs. 100-crore company in the next five years,” states Sharma as he signs off on a note of confidence.
PRINTO DOCUMENT SERVICES
Founder: Manish Sharma
Concept: A quick service retail store that addresses the printing needs of micro and small businesses in India
Investors: Sequoia Capital
Reach: 16 stores in Bengaluru and two in Hyderabad
Revenue target: Growing at 35 per cent annually and set to reach Rs. 100 crore in five yearsPrinto Sequoia Capital SMEs