The Packing & Printing sector exhibits shared negotiation conditions between buyers and suppliers. Buyers benefit from minimal specialization for most products and services as well as low market share concentration, both of which keep price-based competition fierce among suppliers. While the sector’s prices and profit margins are forecast to rise slowly, they will largely do so predictably. As a result, rising prices and profits will have a marginal effect on buyers’ ability to negotiate because price growth will not be swift enough to significantly disrupt downstream markets.
- Product specialization is low across the packing & printing sector
- If necessary, customization of packing or printing products and services is relatively inexpensive, which keeps customization options affordable
- Due to low specialization, packing & printing services have high substitute availability, which affords buyers additional leverage during negotiations with suppliers
Key Takeaway: Buyers should seek transactional relationships with most providers, as these markets generally have abundant substitute availability.
- Market share concentration across the packing & printing sector is generally low, with the top four providers of each market generating less than 30.0% of total revenue
- The only notable exception is paper markets. Both the Printing & Writing Paper market and the Paperboard & Packing Paper market exhibit high concentration due to recent mergers and acquisitions among manufacturers
Key Takeaway: Buyers generally have a multitude of suppliers to choose from. As a result, buyers have the luxury of taking time to evaluate a range of vendors when signing new contracts or switching between providers.
Price and Profit Trends
- Due to waning demand, revenue from printing services has fallen slowly during the past three years. This trend is anticipated to continue during the coming three years
- Printing prices have risen at a mild rate
- On average, profit levels are low
- Most printing-related suppliers are expected to reduce their current profit margins during the coming three years
- Average revenue in packing services markets has been relatively stable during the past three years as wage costs have remained steady
- Profits are higher for packing than for printing; profits are expected to continue growing during the forecast period
- Average prices have grown and will likely continue to do so in the coming years
Key Takeaway: Buyers may need to customize their strategies depending on whether they are purchasing printing or packing services due to the divergence of relative performance between the two sub-sectors. Buyers may reference specific markets such as Packaging Services and Digital Printing Services for further insight.
During the next three years, ProcurementIQ projects that prices will continue to rise for packing services, while prices for printing will rise at a slower rate. Advancements in desktop technology and the ongoing transition of various products and services to online solutions will further suppress traditional printing-related markets. Thankfully for buyers, the packing & printing sector faces a negligible pace of regulatory change and exhibits extremely low switching costs. These attributes, coupled with a wide array of vendors to choose from, gives buyers a healthy amount of latitude in negotiations with suppliers.