On Demand Business Models Explained

An exploration of the different business models and products made possible by adopting an on demand fulfilment strategy

August 2019

Andrew Talbot @customgateway

c u s t o m - g a t e w a y . c o m

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On Demand Business Models Explained Page 1 of 65 Contents

Introduction 4 What Are On Demand Products? 4 On Demand Content Types 5 What is An On Demand Fulfilment Strategy? 6 What Makes On Demand Possible? 6 What is the Difference Between On Demand & Dropship Products? 6 Truly A Global Marketplace 7 Increased Profit Margins for On Demand 7

Photo & Personalised Gift Market Size 8

Photo Gifts 10 Photo Books 11 Prints & Enlargements 11 Wall Art 11 Home Decor 12 Other Gifts 12

Personalised Gifts 13 Flowers 14 Greetings Cards & Invitations 15 Licensed Personalised Products 15 General Personalised Gifts 16 Personalised Hampers & Alcohol 17 Subscriptions 17 Personalised Packaging, Gift Wrap & Gift Boxes 17

Personalised Books & Newspapers 18

Gift Cards & Experiences 19

Personalise Anything 21

Made To Order 22

Made to Measure 23

Home Decor 24

Incentives, Trophies & Rewards 26

Instore Personalisation 28 Instore Printing 28 Dropship Fulfilment 28 Click & Collect 29

Souvenirs 31 Green Screen Experiences 31 Print On Demand for Smaller Attractions 31 Instant Photo Gifts 31

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On Demand Business Models Explained Page 2 of 65 Personalised Souvenirs 32 Event & School Photography 32

Customised Services 33

Fundraising 34

Monetising Your Assets 35

Promotional Merchandise 36 Corporate Programmes Based on Stock 36 One Off Purchase with a Minimum Order 36

Web2Print 38 Business Stationery 39 Invitations 39 Signs, Display & Point of Sale (POS) 39

Workwear, Teamwear & Uniforms 40 Workwear 40 School Uniforms 40 Teamwear 41

Sales Promotion & Premiums 43

Print On Demand 45 Fast Fashion 46 User Generated Content 47 Brand Extension 47 Licensed Content 47

Stock on Demand 48

Printables 50

Marketplace Traders 51 Becoming Your Own Marketplace 52

Conclusions 53

Appendix 55 How Technology Helps Reduce The Barriers To Entry & Harness the Market Drivers 56 Overview of How Markets Are Enabled 57 Summary of On Demand Decoration Options 61 Estimated Market Values 63 Organisational Changes Needed for Mass Customisation 64 References 65

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On Demand Business Models Explained Page 3 of 65 Introduction

The objective of this white paper is to introduce you to the brave new world of on demand fulfilment and the business models that this opens up for companies by exploring the potential ways in which it could change an existing market you are involved in or create a completely new market

Some business models are completely new and many are a disruption of the way an existing market currently works - potentially making them either more profitable or easier to enter / manage

Some of these markets are now also starting to mature but even they are changing as the internet continues to revolutionise sales, production & fulfilment

The list of 50 potential markets in this paper is intended as a guide to the most established markets and is no by no means an exhaustive list of all markets currently using the on demand business model. Many of the markets and their various sub markets cross over into each other and like you would expect also disrupt each other

What Are On Demand Products?

The term “on demand” means products that do not really exist until they are ordered and has three main definitions in this white paper

● Virtual products that only become real products when they are ordered. This is usually by decorating or printing on a blank product ● Made to order products that are created from base component and made from scratch when ordered ● Virtual stock products that are not owned by your company or kept in your warehouse but stocked in a third party warehouse and ordered on demand (commonly known as dropshipping)

All these types of products can be used individually or in combination to power an on demand business model and will be explored in more detail over the pages of this white paper

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On Demand Business Models Explained Page 4 of 65 On Demand Content Types

Virtual and made to order products typically fit into five main content types that we will also explore in this paper as these certainly effect which markets may be most desirable for your business

1. User Generated Content - your customers create their own content either for themselves or others to use from customisable blank products 2. Simple text personalisation on a predesigned template 3. Licensed Content - brand owners supply content 4. Designer Orientated Content - designers provide patterns and images 5. Parts & Components - provided by manufacturers to enable product configuration or mix & match

Again we will explore these in more detail over the following pages

Many of these markets are interlinked and we can learn from each of them trick & tips to maximise revenue

As you can tell from our logo Custom Gateway are a company that specialise in providing a platform for the creation, management and fulfilment of on demand products so we are always keen to understand the markets in which our customers work and could work in the future

All markets introduced in this white paper are made possible by technology and we will illustrate how they have or will evolve as technology evolved and improves

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On Demand Business Models Explained Page 5 of 65 What is An On Demand Fulfilment Strategy?

Companies traditionally sell what is in their own warehouses or shops - an on demand strategy is focussed on what product can easily be accessed by a retailer or trader and can be more focussed on the current market trends - it is powered by platforms like Custom Gateway and enables businesses to increase their inventory without increased their investment in stock and perhaps even more importantly not be left with stock that will not sell

On demand fulfilment is split into 3 main areas all of which purchase, supply or create products only when a customer orders hence “on demand”

● Mass Customisation - using mass production techniques for order quantities of one ● Made to Order - final products made from stocked components ● Dropship - stock in warehouses owned by other people that are delivered direct to the customer on demand rather than being stocked in sellers warehouse

The key benefits of an on demand strategies are explored over the following pages but all on demand strategies benefit from increased choice and reduced or zero stock holding

The most common On Demand Strategy is known as “Dropship” when products are delivered direct to a consumer but with some companies having increasingly sophisticated delivery networks this is not the case for all on demand orders and deliveries back to distribution hubs to be consolidated or even click and collect are certainly also part of the On Demand world

What Makes On Demand Possible?

Although this paper focuses on the business models made possible by on demand fulfilment it is also worth summarising the key principles that have made the “on demand” model a reality

1. The Internet - has made it possible to connect companies like never before 2. Software Platforms - mean that both access to product data and automated ordering are easy 3. Reduced Distribution Costs - mean it is feasible to ship products from both multiple and international locations 4. Available Suppliers - who understand the model can tailor their business processes to suit an on demand model 5. The Long Tail - means people are used to and demand more choice

If you are interested in learning more about these factors then we have produced a more in-depth white paper called “Understand Mass Customisation” available at www.custom-gateway.co.uk/white-papers/ ​ What is the Difference Between On Demand & Dropship Products?

In reality there is no difference they are just different ways of describing the same thing so you can substitute dropship for on demand anywhere in this white paper. The term Direct Despatch products is ​ ​ also used by some companies to mean the same thing. The fact that different people call the market by different names does lead to some confusion when analysing how different companies approach the opportunity but hopefully this white paper will help clarify

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On Demand Business Models Explained Page 6 of 65 Truly A Global Marketplace

On Demand does not only present increased business opportunities in local markets but also makes it easier for almost any company to adopt a global strategy

With Dropship suppliers already in existence globally using a common software platform that creates either artwork, component build choices and branded paperwork automatically every organisation could now benefit from localised manufacturing

A good example would be a designer or company that trades on a marketplace in one country but want to sell their products in another country. A marketplace like Amazon makes it easy to sell in multiple regions and then a software platform like Gateway OMS makes it easy to source and use prints in that region. This kind of expansion would traditionally only be possible for large organisations due to the set up costs and logistics but now on demand makes this affordable for even the smallest company - a real ​ market disruption

Based on the recent Technavio report this is the current and anticipated future breakdown of sales for personalised products globally

Increased Profit Margins for On Demand

With profit margins becoming increasingly tight for many retailers & etailers many on demand products offer the opportunity to improve profit margins. According to a recent Deloitte report “The Rise of Mass Personalisation” most consumers are happy to pay a 20% premium for personalised products. Other product groups like made to measure and made to order can command even higher premiums

If you add the fact that people will pay more for personalised products to the fact that retailers do not have to pay for them until they are sold it is easy to see why most companies are keen to get involved

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On Demand Business Models Explained Page 7 of 65 Photo & Personalised Gift Market Size

As many of the sectors we explore in this white paper are so diverse and often overlap it is difficult to get a really accurate picture of the overall market size but for photo and personalised gifts there is some pretty good research recently published In the “Global Personalized Gifts Market Report 2017-2021” by ​ Technavio.com that we have summarised below in a couple of infographics ​

Personalised now accounts for almost 40% of total gift market

Despite challenging conditions for retailers Personalised Gifts are still predicted to grow by almost 10% year on year for the next 5 years

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On Demand Business Models Explained Page 8 of 65 Throughout this white paper we will use different terminology to refer to different product groups that can be grouped under the “On Demand Products” banner

On page 4 we identified the 3 main types of On Demand Products

● Virtual Products - typically personalised and print on demand ● Made To Order Products - typically made from components or simple manufacturing processes ● Virtual Stock Products - typically products that already exist but in somebody else:s warehouse

The Technavio data focuses only on the personalised gifts / products market and does not take into consideration the other type of virtual products “print on demand” which is currently at least as big and likely to grow considerably faster as on demand disrupts the traditional printed clothing market.. We provide a full overview of estimated market sizes on page 62

We have also covered the main content types for personalised products on page 5 and the chart below shows the current split between the photo gifts and other personalised gifts. We will explain these products / markets on the following pages

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On Demand Business Models Explained Page 9 of 65 Photo Gifts

The market for developing films to create photo prints has just about disappeared as digital technology has taken over yet the market for printing your images has continued to flourish. A great example of the increasing popularity of user generated content.

The main beneficiary of this global trend has been the photo gifts industry with more and more products being launched every year that you can print photos on. Photo gifting is all about user generated content with in some cases the use of preset templates to drop photos into

According to a recent survey on the Global Personalised Gift Market Photo Gifts accounts for almost 32% of the total personalised gifts market place so although you need more advanced software to sell these products it is difficult to justify not selling them

This is one on demand market that is quite mature but still seeing growth based on product innovation and printing advances

As the name suggests this market is all about people uploading their own images so fits into the user generated content category and is very much about products only be created when they are ordered

Here are examples of some of the leaders in photo gifts

● Shutterfly - www.shutterfly.com ​ ● Photobox - www.photobox.co.uk ​ ● Max Spielmann - www.maxphoto.co.uk ​ ● Cewe Photobooks - cewe-photoworld.com ​

Growth Drivers

● Smartphones increasing the number of photos taken ● Social media promoting the sharing of images ● Printing technology makes it possible to add photos to more products ● Consumer Awareness of the availability of these types of products ● Better browser technology and faster internet making it easier to create products

Barriers to Entry

● Need image upload tools on your website ● Need specialists printing equipment for fulfilment ● The wide range of printing equipment now needed to offer a good product range

Main Printing Equipment Used

● Photo Sublimation Printers for Prints ● Sublimation for Gifts ● Digital for Photo Books ● UV for printing photos on plastics & leather

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On Demand Business Models Explained Page 10 of 65 There is a pretty established dropship supply chain for photo gifts making it easier for new market entrants and also a fair amount of expertise and hardware available for Instore production

The main product categories in photo gifting are detailed on the following pages

Photo Books

This is probably the highest revenue area and has become a very popular way for people to showcase their photos.

These require a more complex customisers and people often spend hours creating their books - it is really a kind of self publishing used to celebrate or remember an event or holiday

The market for the traditional photobook has continued to grow over the last decade with lots of innovation within both types of books and software to create photo books.

Historically a lot of photobook software solutions have involved downloading the software and building photo books offline however faster internet speeds and improved browser technology have lead to most photo books now being created within your web browser

Market Leaders Local & Global https://cewe-photoworld.com https://www.snapfish.co.uk/photo-books https://www.vistaprint.co.uk/photo-gifts/hardcover-photo-books

Prints & Enlargements

Surprisingly despite the availability of printers at home there is still a strong demand for prints and reprints of digital photos . There is both a traditional low cost reprint market using silver halide printing ​ ​ technology and an enlargement business for creating posters using digital print technology

There are also several specific business areas that are still driven by photo prints

● School photography ● Event photography ● Portrait photography ● Image Archives - like newspaper groups

Wall Art

The market for canvas prints has grown steadily over the last decade too and print technology has seen a big increase in the variety of different substrates offered as wall art

● Canvas ● Acrylic ● Aluminium ● Wood - Interior & Exterior ● Foamex Board ● Framed Posters ● Self Adhesive Posters

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On Demand Business Models Explained Page 11 of 65

Design trends such as collages, word art, large online photo libraries and vintage reproductions have all also helped push sales. Content can vary from people uploading their own photos (user generated content) to people selecting images from vast photo libraries like Adobe Stock & Pixabay

This has become a very competitive sector as high value and the equipment to produce is fairly affordable so it is the retailers that offer ideas and templates that currently seem to be flourishing

Some leading wall art sites to review are

● www.picanova.com - create your own ​ ● Fineartamerica.com - create your own and choose from an image library ​ ● www.photobox.co.uk/shop/canvas-prints

Home Decor

Started as very much of a sub section of photo gifts but we will reveal further on in this white paper it has become a section in its own right and one of the fastest growing

Other Gifts

The range of other photo gifts continues to expand every year and to a certain extent continued strong market growth has been driven by this innovation

The best selling other gifts categories are

1. Mugs 2. Phone Cases 3. Cushions 4. Bags 5. Calendars 6. Notebooks 7. Coasters & Placemats 8. Desk Gifts 9. Kitchen accessories 10. Food & Drink

Photo gifts are also the basis for print on demand products which are explored later in this paper - in simple terms anything that is available as a photo gift can also be sold as a Print on Demand or.a Personalised product as detailed in the next section

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On Demand Business Models Explained Page 12 of 65 Personalised Gifts

This is a relatively new market that is still growing as retailers harness website plugins to make the buying experience more seamless and suppliers understand more about what decoration technology makes possible

As the research shared earlier indicated Personalised is now almost twice as big as photo gifts and expected to be worth £Billion by 202

Market is very driven by traditional gifting events events like Christmas, Fathers Day & Valentine’s Day as well as birthdays / anniversaries

It has certainly disrupted the existing gift market and according to the recent survey 68% of gifts are non photo which values this market at about X and that excludes flowers and greetings cards which are big categories in their own right

Licensed products are still popular but in the best tradition of on demand products there is a very long tail of independent designers creating products

All photo gifts suppliers can in theory produce personalised gifts but not that many do so there is a huge potential supply chain if you have your own content. Most of the suppliers have built their business on user generated content and are looking for ways to drive sales forward

The high volume of independent designers has led to the rise of creative marketplaces like Not on The High Street or Etsy where designers either harness this supply chain or have their own small scale production operations.

This fragmentation is also a good opportunity for retailers to reduce manufacturing costs and increase profits if they have their own designs

Here are examples of some of the leaders in Personalised Gifts

● Not On The High Street - www.notonthehighstreet.com ​ ● Getting Personal - www.gettingpersonal.co.uk ​ ● Your Surprise - www.yoursurprise.nl ​ ● Etsy - www.etsy.com ​ ● Personalisation Mall - www.personalizationmall.com ​ ● Amazon Custom - www.amazon.com/Amazon-Custom/ ​ ● B2B trade marketplace for download - www.virtualproductwarehouse.com ​

Main Growth Drivers

● Increased global gifting culture ● More inventive products ● Better quality products becoming available ● Browser development ● Printing technology ● Awareness of products

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On Demand Business Models Explained Page 13 of 65 Barriers to Entry

● Need extra field on ecommerce website ● Customers want and expect a preview ● Need a wide range of suppliers ● Wide range of printing equipment needed for self fulfilment

Main Printing Equipment Used

● Photo Sublimation Printers for Prints ● Sublimation for Gifts ● Digital for Photo Books

As well as the photo gift suppliers there is also a reasonably well established specialist supply chain that has developed from traditional B2B suppliers in the sign , promotional and graphics industries using mainly dye sublimation and CVT (Cut Vinyl Transfer) printers because of the wide range of products they can produce

The main product categories in personalised gifts are detailed below

Flowers

A very established and large marker which is more of a Made to Order product but is still showing growth mainly down to the opportunities for flower retailers to cross and up sell additional personalised products with flowers

● Chocolates ● Cards ● Hampers ● Soft Toys

This has also happened in reverse with cards and gift retailers getting into flowers for example Moonpig.com

The delivered flowers market is believed to be worth an estimated £X billion and is excluded from the figures quoted for other personalised gifts

This is a good example of the evolution of the supply chain as A specialist supply chain has evolved to enable non flower retailers to sell flowers on the internet

Flowers is also a great example of how on how the internet has disrupted an established market with % now being ordered online through a wider variety of sellers - this has undoubtedly increased the market but also reduced the traditional income of florists - although it can certainly be said that businesses like Interflora have harnessing the existing supply chain to drive competitive advantage

This is something more and more on demand bricks & mortar retailers are looking at with Next being a good example

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On Demand Business Models Explained Page 14 of 65 Greetings Cards & Invitations

This is perhaps the most famous personalised product and has historically been dominated by Moonpig who have certainly disrupted this market and could be said to be a key driver of companies like CLintons cards going into administration as people's buying habits have changed

Moonpigs success has encouraged many copycat etailers and technology certainly makes it easier for consumers to buy and send cards online

Interestingly not all cards are personalised on the front cover but just as many personalise the inside pages of a card online where sometimes people just want to write inside the card makes the customers life easier by meaning they can write a personal message and do not need to find a stamp and a postbox

A great additional use of technology is to store birthdays and then send reminders / card ideas to stimulate repeat purchase. Buying bulk credits has been another technology driven sales approach to this sector

Examples of leading personalised card websites

● Moonpig - www.moonpig.com ​ ● Scribbler - mainly inside the card personalisation - www.scribbler.com ​ ● Funky Pigeon - www.funkypigeon.com ​ ● Thortful - Greetings card marketplace - www.thortful.com ​

The invitation market is split between web2print specialists and greetings card retailers who tend to focus on the more up market products. Technology now makes it easier to personalise invitation and the average order value is clearly much higher than the purchase of a greetings card for an individual making it a very desirable target market

Here are a few invitation specialists

● Papier - www.papier.com ​ ● Hitched - www.hitched.co.uk/stationery ​

Licensed Personalised Products

Although more of a content type (see page 5) then a sub sector of personalised gifts licensed products are becoming increasingly popular as personalised gift category because fans are seeking to create unique memorabilia. This is confirmed in the recent Deloitte Report ”The Rise of Mass Personalisation” which suggests 42% of consumers are happy to be led by brands rather than create their own products from scratch.

Licensed products are also becoming increasing popular in the print on demand space (see page 46) for more details

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On Demand Business Models Explained Page 15 of 65 General Personalised Gifts

This category has seen the most dramatic growth with Not On The High Street growing very quickly by aggregating sellers under a single brand - again something not possible without technology

The chart below illustrates the most popular product categories within the other gifts section. TShirts would rank as just about the most common wearable and probably on demand product as they are not only a gift.

Many of these categories crossover into other sectors and some have their own categories like personalised greetings cards, hampers and drinks

As the number of gifts that can be personalised continues to expand driven by both the increasing consumer demand and improved decoration techniques we thought it would be useful to split the above categories down into some of their most popular subcategories

Wearables Decorations Kitchen & Tableware Stationery

TShirts & Polos Party Banners Mugs & Drinkware Notebooks Outdoor Wear Christmas Decorations Aprons & Tea Towels Pens & Pencils Sports Wear Balloons Chopping Boards Pencil Cases Shoes & Socks Wrapping Paper Table Mats & Coasters Greetings Cards Caps & Hats Glasses Postcards Bags Calendars

Food & Drink Sports & Toys Other

Confectioney Water Bottles Bedding & Blankets Bottled Drinks Towels Make Up Bags Chocolates Puzzles Lunch Boxes Cakes & Biscuits Soft Toys Luggage Sauces Pets Jewelry

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On Demand Business Models Explained Page 16 of 65 Personalised Hampers & Alcohol

As detailed above Hampers and alcohol fall into the food & beverage section of personalised gifts

Hampers are a popular made to order product that are put together on demand with choices of different products to complete a hamper (hence made to order). Hampers are a very high value gift

There are four main types of personalised alcohol

● Personalised Label - supplied independently or with bottle ● Direct Print to Bottle ● Personalised Wine Blend with Label ● With Personalised Gift Box

Alcohol has always been a popular gift but by adding a personalised label or gift box it increases - this also drives trend for creating sets - like a bottle of scotch with engraved whisky glasses or cheese selection with a personalised cheese board

Both product categories are also a big corporate gift either personalised or just company branded

Here are some good example websites

● Label Only - www.personalisedbottlelabels.co.uk ​ ● Blend Your Own Wine - blendtique.com ​ ● Build Your own Hamper - www.hamper.com/create-your-own ​ Subscriptions

Are inherited from the publishing industry and allow people to personalise their choice - there is a lot of cross over to other categories like flowers, alcohol etc but this is an increasingly popular way of selling for retailers as they secure a higher value order and by using technology can be confident of fulfilment

There are now a few specialist tools to help you manage subscription businesses like www.subbly.co ​

Subscriptions have become a popular gift and although can be for personalised products the most popular use is a recurring purchase like a new bottle of gin to try each month, or fresh flowers once per month. The key is to make sure the fulfilment is automated once the subscription has been paid for

Personalised Packaging, Gift Wrap & Gift Boxes

Although can be included as part of an upsell for most personalised gifts this does justify its own sub category as many people now use personalised packaging to personalise a non personalised gifts. The most popular products are listed below

● Gift Wrap ● Bottle Bag or Presentation Box ● Box

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On Demand Business Models Explained Page 17 of 65 Personalised Books & Newspapers

Could be considered part of personalised gifts but probably now big enough to have its own category this disrupting the traditional children’s book market and increasing choice in the birthday / anniversary gifting space

Technology is particularly important here both on the website to visualise a personalised book and even more importantly in the factory to automatically create the artwork for production

Here are examples of some of the leaders in personalised books & newspapers

● Wonderly - www.wonderbly.com ​ ● Signature Books - Wholesale Supplier - www.signature-gifts.co.uk ​ ● Pen Wizard - www.penwizard.com ​ ● Spoof Newspapers - www.inthepaper.co.uk ​ ● Original Newspapers - www.historic-newspapers.co.uk ​

Growth Drivers

● Wider range of choices now available ● Increased interest from traditional publishing houses ● Printing technology is reducing production costs ● Awareness of products by consumers

Barriers to Entry

● Need fairly complex data capture on website ● Specialists printing equipment quite expensive ● Higher product set up costs in design, copyrighting & artwork set up ● For Newspapers you need an archive of old papers

Main Printing Equipment Used

● Digital Print ● Book Binding Equipment ● Embossing and box making equipment

There is now a pretty established supply chain and printer manufacturers like HP are helping drive down production costs and more and more companies can produce books

The market is split between original designs and licensed products

There is also an interesting additional market for newspapers which make great birthday gifts as they feature a certain date and are split into

● Spoof Newspapers ● Front Page Reprints ● Supply of Original Newspapers

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On Demand Business Models Explained Page 18 of 65

Gift Cards & Experiences

On demand is adding flexibility and choice to gift cards and experiences and is at a fairly early stage of development

As with Greeting Cards it is expected that production technology will now increase the number of gift cards that are personalised because as the name suggestS they are predominantly a gift and personalisation is proven to be popular to demonstrate more thought

Gift cards can be both personalised and on demand and as the name suggests you are selling a service - this is ideal to tie a gift card to a one off event

As the experiences market has matured and got more competitive personalisation has started to be used to differentiate and add value to an experience by delivering a personalised presentation box / certificate or extra personalised product related to the gift

Both the reasons above have been proven in other markets

Here are examples of some of the leaders in selling experiences

● Red Letter Days - www.redletterdays.co.uk ​ ● BuyaGift - www.buyagift.co.uk ​ ● Virgin Experiences - www.virginexperiencedays.co.uk ​ ​ ● Activity Superstore - Trade & Wholesale - www.activitysuperstore.com ​

Growth Drivers

● Consumers looking for something a bit different ● Increased gifting culture ● Awareness of market sector ● Consumer increased use of personalisation ● Increasing need to differentiate the product

Barriers to Entry

● Very fragmented supply chain really need a wholesaler ● Different selling an intangible product - different data capture ● Complexity of managing redemption

Main Printing Equipment Used

● UV & Digital Printers for Gift Cards ● Sublimation for Gifts ● Inkjet for low volume personalised Labels of Certificates

There is a huge potential supply chain for experiences but it is fairly fragmented hence the evolution of a wholesale / trade market managed in the UK by companies like www.activitysuperstore.com ​

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On Demand Business Models Explained Page 19 of 65 The main product categories for personalised experiences are centred around

● Driving ● Health & Beauty ● Short Breaks ● Food & Drink ● Days Out ● Adventures

The gift card industry is increasingly adopting personalisation either on the accompanying greetings card or on the actual gift card itself

The main reason for slower adoption of personalised gift cards is the cost of setting up instore printing (which is now considerably reduced) and the increased security requirements surrounding the cards themselves

There are several specialist companies like www.nitecrest.com who can provide both blank pre-charged ​ ​ cards for your own personalisation or a digital fulfilment service to print for companies

As well as personalised or print on demand gift cards there is another application in the on demand world for gift cards for helping retailers sell personalised products without an instore kiosk. This market is best explained on www.customproductcards.com ​

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On Demand Business Models Explained Page 20 of 65 Personalise Anything

A new market that is emerging driven by improving decoration technology and the desire of retailers to find added value on existing products that can increase the margin they make and in some cases create an Instore customer experience

It is really an upsell / cross sell business model where people are offered the opportunity to add personalisation to a standard product during the online sales process

The main product categories currently using the model are children’s wear, sports wear and gifting

Some good examples of who do this model well are

● Next - Personalised Nightwear - www.next.co.uk/style/st408664#546973 ​ ● Zara - introduce personalised clothing - www.zara.com/uk/en/help/customised-items-h51.html ​ ● My First Years - Personalised Baby Products - www.my1styears.com ​ ● Fanatics - Personalise Sports Products - www.fanatics.co.uk ​ ● Thorntons - Personalised Chocolates - www.thorntons.co.uk/personalised-gifts ​

Growth Drivers

● Availability of low cost decoration options that can be added to warehouses ● Retailers looking for ways to increase profits ● Consumer demand ● Better website technologies

Barriers to Entry

● Making batches of 1 can be expensive if not good automation ● Need well executed cross sell model on your website ● Depending on options offered may need quite a wide range of equipment

Main Printing Equipment Used

● Embroidery - single head machines ● Engraving ● UV for packaging

There is currently only a few innovative suppliers that have invested in the equipment and software needed to deliver the mass customisation model

Main product categories are kids wear, sportswear. night wear and accessories like bags. The personalisation type is usually a simple name or initials

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On Demand Business Models Explained Page 21 of 65 Made To Order

Often known as MTO this is the ultimate mass customisation business model where products are made up of a range of parts & components and the customer gets to customise almost every aspect of their product

The term made to order could really apply to any personalised, print on demand or customised but in this white we use it only to refer to products made from premade parts, components and processes

The concept can apply to all sorts of products and was really started by Dell in the late 90s and taken to the next level by Nike

Another innovative made to order application is cut and sew which combines a personalised product with a made to order products - the example we use below is leggings

Here are examples of some of the leaders in made to order

● Nike ID - www.nike.com/gb/nike-by-you ​ ● Dell Computers - www.dell.com ​ ● Car Manufacturers - www.audi.co.uk/explore-models/audi-car-configurator.html ​ ● Player Layer - playerlayer.com/leggings-studio/leggings-studio-run/lifelayer-leggings-custom-print.htm

Growth Drivers

● Consumer desire to create something original ● Investment by brands in how this creates a point of difference ● Awareness of what is now possible ● More advanced eCommerce ● Automated production machines like cutters

Barriers to Entry

● Expensive to set up a factory ● Needs a separate website as very complex to delivery online

Main Printing Equipment Used

● Selection of standard items for mix and match ● Fabric Sublimation ● Laser cutters

Most of this type of business is currently done direct by the brands themselves

The main product categories are Sportswear, Furniture and Technology

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On Demand Business Models Explained Page 22 of 65 Made to Measure

Often known as MTM this is the ultimate mass customisation business model where products are made to individual

This has existed as a service industry but technology has enabled it to start to move online

Established offline market such as made to measure clothing, made to measure curtains and blinds

Here are examples of some of the leaders in made to order

● Tailorstore = Clothing - www.tailorstore.co.uk ​ ● Hillaries Blinds - www.hillarys.co.uk ​ ● Next.co.uk - https://www.next.co.uk/shop/department-homeware-productaffiliation-madetomeasure

Growth Drivers

● Continued need for bespoke sizes ● Traditional business models moving online like M2M ● Reduced range in retail ● Lower delivery costs mean higher value products can be produced cheaper ● Technology making shorter sales process

Barriers to Entry

● Expensive to set up a factory ● Needs a separate website ● Need an enabled supply chain

Main Printing Equipment Used

● Photo Sublimation Printers for Prints ● Sublimation for Gifts ● Digital for Photo Books

More about enabling the existing supply chain to work online and making lower cost offshore manufacturing possible

The main product categories are fashion and home decor

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On Demand Business Models Explained Page 23 of 65 Home Decor

Home Decor has historically been considered a subcategory of photo and personalised gifts but as one of the fastest growing sectors of personalised products it now really justifies its own section in this white paper

Home Decor covers a wide range of products from curtains to cushions to wallpaper basically almost anything you can think of to decorate a room. Over the past 5 years sales of personalised cushions have grown dramatically as the quality of the product has improved and it is now one of the top 5 selling personalised products

Many retailers are keen to promote as products typically have higher than average selling prices and are purchased in reasonable volumes There are also good opportunities for both B2C sales for the home owners and B2B sales for more upmarket office decoration

User generated content is probably the most popular design source but there is but also lots of demand for niche designs and an increasing demand for licensed products too. It does not always have to be all about printing and configuring your own furniture from a range of fittings / materials is also a popular option for personalised home decor

Here are some examples of interesting personalised Home Decor websites

● Society 6 - society6.com/furniture ​ ● www.bagsoflove.co.uk ● www.photowall.co.uk ● Mwwondemand.com - market leading trade suppliers for textile products ​

Growth Drivers

● Better Quality Products & Printing technology ● Design trends ● Awareness of concept ● Long tail theory

Barriers to Entry

● Websites will need image upload tools ● Equipment more expensive to buy and supply chain not that mature ● People do not look for these type of products on gifting sites

Main Printing Equipment Used

● Digital printing for wallpaper ● Roll to roll Sublimation Printers for textiles ● Cut & sew facilities required ● Vinyl printing for wall decals ● UV printing for accessories

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On Demand Business Models Explained Page 24 of 65 Most photo gift suppliers provide some home decor product but there is not really a specialist supply chain covering all product groups yet. Suppliers tend to either specialise in textiles, furniture or wallpaper

With options like UV printing there is an increasingly wide range of products available but the main product categories currently being sold are listed below

● Bedding ● Cushions ● Wallpaper ● Wall Decals & stickers ● Floor coverings ● Furniture ● Lamp Shades

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On Demand Business Models Explained Page 25 of 65 Incentives, Trophies & Rewards

A traditional marketplace with most towns having their own trophy shop supplying clubs, businesses and companies that has started to change over the last 5 years with online providers gaining increasing market share as they were able to offer a wide range of products and services

Personalisation for trophies is fairly simplistic with most products being engraved so all you need to do is capture a text field online. These types of products have always been produced in batches of one in small shops but in our modern on demand world there is an opportunity to automate the engraving process and go direct from website to engraving machine

There has also been strong growth for companies providing rewards and incentive programmes an industry that has evolved from sourcing carriage clocks as long service awards to providing an IT platform to help businesses motivate and reward their staff

Like many of the sectors we explore in this white paper there is a fair amount of cross over between different markets with trophies and rewards often being sold by promotional product distributors or web2print specialists. This is only likely to increase as historically many businesses have avoiding this market as it can be expensive to handle batches of one but as you now hopefully appreciate technology is changing this situation and we are likely to see less trophy shops on the high street in years to come

Here are examples of some of the leaders in trophies and incentives

● Trophy Store - www.trophystore.co.uk ​ ● Perk Box - www.perkbox.com/uk ​ ● Terry Berry - www.terryberry.com ​

Growth Drivers

● Younger consuming wanting to purchase these kinds of products online ● Technology making it cheaper to process small orders ● Increasing competition for the best staff has led to more focus on staff retention ● Printing technology offering faster product ● Innovative new products

Barriers to Entry

● Need to invest in technology to make small order profitable

Main Printing Equipment Used

● Engraving for trophies awards & medals ● Sublimation for Gifts / Certificates

There is a very established supply chain of wholesalers used to supplying small distributors with blank products for engraving and also quite a few sub contract engraving suppliers

The main product categories sold in trophy shops can be split into

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On Demand Business Models Explained Page 26 of 65

● Trophies ● Medals ● Awards & Plaques ● Crystal Glasses & Decanters

For staff rewards and motivation there is a really wide range of products that can be used and will all be mentioned in other categories

● Gift Experiences ● Luxury personalised gifts - engraved metal & leather ● Treat based personalised gifts like chocolate

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On Demand Business Models Explained Page 27 of 65 Instore Personalisation

Instore personalisation is something that has been made possible by the advance in printing technologies and the reduction in costs of printer purchase

There are typically 4 main reasons why retailers may choose to personalise in store rather than offer a dropship fulfilment model

● Instore personalisation is a great way to introduce some instore theatre ● Printing instore will almost certainly improve sales performance as shoppers always prefer to take away their purchases on the spot, ● Brands are very keen to offer in store promotions to increase their profile and encourage loyalty ● Providing a click and collect service

Traditional you have always needed to purchase Kiosk and Printing equipment to start personalising in store but this market is being disrupted by technology such as the smartlink from Custom gateway that can be loaded on any internet enabled device (even the customers smartphone) that enables the creation of personalised products and can then trigger the generation of the print ready artwork

As detailed above brands are becoming increasingly interested in instore personalisation as part of their marketing campaigns - here are some examples of recent in store promotions that have been very popular successful

● Personalised Jars of Nutella ● Personalised Toblerone ● Kinder Easter Eggs with Personalised Boxes

There are 2 main options for fulfilment

Instore Printing

The most popular option is to print products in store but this does require an investment in printers and suitably trained staff to produce products. With modern UV printers almost anything can be printed and instore

Dropship Fulfilment

If a company does not have the space, budget or suitable staff then they can still sell personalised products in store by offering a dropship fulfilment service where customers pay in store and their products are produced off site and either delivered back to the store or direct to their homes

When a retailer wants to offer a wide range of products they often combine both in store printing for the most popular lines and use dropship fulfilment to extend the range without needing additional printers etc

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On Demand Business Models Explained Page 28 of 65 Click & Collect

For traditional eCommerce click and collect accounts for almost half of retailers sales so it is not surprising that with the growth of Instore personalisation and improved service levels for drop fulfilment it is. Continuing to increase in popularity

For photo gifts and personalised gift franchises 1 hour click and collect is not unusual with most photo gift retailers offering the service

Here are examples of some of the leaders in providing in store printing services - most like Custom Gateway offer a software / training solution but some providers will help staff an in store printing franchise

● Custom Gateway - provide software to work with any products or printers ● YR Store - provide a full service ● Handmade Christmas - enable in store personalisation of seasonal products ● Creation Express - provide a franchise package with software, printers & products

Growth Drivers

● Printing technology ● Reduced cost of printers and opportunity to create on any internet enabled device ● Awareness of concept via successful promotional campaigns ● Retailers looking for in store theatre

Barriers to Entry

● Cost of kiosks can be expensive when you have multiple branches ● Staff need training ● Retailers often struggle with space ● Range of printing

Main Printing Equipment Used

● UV ● Inkjet for labels ● Engraving ● Embroidery

There is a pretty established supply chain for providing the popular blank products and appropriate equipment. There is also an opportunity for retailers to personalised their own stock products as described in the “Personalise Anything” part of this report

The main product types that are currently successfully printed in store are

● TShirts ● Packaging for Confectionery & Cosmetic Products ● Phone Cases ● Mugs

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On Demand Business Models Explained Page 29 of 65 ● Photo Prints & Wall Art ● Engraved gifts

Due mainly to the popularity of Instore personalisation in hypermarkets and click and collect in the US . Instore personalisation accounts for a surprisingly large percentage of total personalised sales

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On Demand Business Models Explained Page 30 of 65 Souvenirs

Attractions, shopping centres and events are all about experiences and have been selling many different types of souvenirs and merchandise for many years but as detailed on the previous pages the evolution of in store personalisation, green screen photo technology and the growth of the print on demand fulfilment model has created new opportunities to increase sales

Although like many other categories there is cross over souvenirs really needs its own category due to the substantial sales volumes being generated and we detail detail below the main sub sectors

Green Screen Experiences

Also known as chromakey photography this is when a visitor is photographed against a green background and then their image is superimposed against a range of relevant backdrops to the attraction. These images are then sold as prints, posters, books and other gifts. Examples of locations offering these photos are places like

● Harry Potter Experience ● Manchester United Football Club ● London Zoo ● Disneyland

Green Screen needs somebody to take the photos (although self service models are coming) so only really works in areas of high visitor numbers that can generate the income to cover the photography costs

It also works best when the products are proactively sold to visitors

Although this market has existed for a while there are several new innovations on the way that will allow people to upload their own photos (so no green screen required), sell online as well as on site at the attraction and new virtual reality apps that can make the experience more self service

Print On Demand for Smaller Attractions

Smaller attractions are now using print on demand to expand their merchandise ranges enabling them to try new ideas and not get stuck with stock. This has expanded both the number of attractions able to sell merchandise and the range of products that can be offered . More details can be found in the print on demand section. Museums like the Science Museum and Natural History Museum have both started to use print on demand to expand their product ranges

Instant Photo Gifts

Are sold mainly at theme parks where visitors get photographed on a ride to see their photos on a screen and then buy either a print or their photos inserted inside an acrylic block, branded frame, key ring, phone case or other product. This is also a substantial market as people love to take home a keepsake of their favourite ride. The products are quite simple and basic but are very quick and cheap to create. More theme parks are now looking into more sophisticated forms on onsite personalisation as detailed in the Instore personalisation section. Attractions like Alton Towers sell 100s of instant photo gifts every day

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On Demand Business Models Explained Page 31 of 65 Personalised Souvenirs

As with normal gifts there is a growing demand for personalised non photo gifts too with many attractions now installing kiosks so visitors can design then collect a print of various products like books and newspapers as a souvenir of their day

As with more general gifts these can be produced onsite or sold online if the attraction has an active website

Event & School Photography

The final big area for souvenirs is event and school photography. This could also be classed as a photo gift but we think it sits better as a souvenir as the purchase is certainly driven by attending a sporting / entertainment event or being in school class / year

This is currently dominated by standard print sales but has great opportunities to be expanded by using the digital assets to print on other product types using dropship fulfilment as detailed in the “Monetising Your Assets” section of this white paper

Growth Drivers for the souvenir market are

● Green Screen technology ● Print on demand making more products possible ● Awareness of new products ● Dropship fulfilment ● Instore printing

Barriers to Entry

● Investment in equipment ● Can be time consuming

Main Printing Equipment Used

● Photo Sublimation Printers for Prints ● Sublimation for Gifts ● Digital for Prints

There is a pretty established supply chain for both the product blanks, dropship fulfilment and in store printing as detailed in other sections

The main product sectors are listed below

● Prints ● Instant Gifts ● Wall Art ● Clothing

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On Demand Business Models Explained Page 32 of 65 Customised Services

Personalisation is not limited to physical products but as the research below from Deloitte indicates it is also increasingly popular when selling services like holidays, flights, restaurants and hotels

The chart opposite shows what personalised products have been recently purchased by consumers and as you can see about 25% of them are services rather than products

Here are examples of some of the leaders in the selling customised services

● Ryan Air - www.ryanair.com/ ​ ● Trivago - www.trivago.co.uk ​ ● Expedia - www.expedia.co.uk ​

Growth Drivers

● Consumer demand for more choice ● Advances in technology for online booking systems ● Increased use of smartphones ● Service providers looking for more ways to differentiate their offering ● Rise of comparison sites ● Availability of data from from service providers

Customised services are very much like personalised gift experiences and in most cases are not about printing something personalised but putting together a range of options. They fit into the made to order content product type

Barriers to Entry

● Need the ability to make different choices on your website - it is not just about buying a product ● Need integration with a diary or booking system so can be certain service available if date related ● Need service provider to be connected to the online world so can offer automated fulfilment ● Currently a fairly poor supply chain - you will need to build your own like the Uber example below

Uber Eats is an interesting example of a personalised service where Uber have gathered data from a range of take aways so they can offer a customised food delivery. Clearly Uber own no restaurants but have become a big personalised food supplier

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On Demand Business Models Explained Page 33 of 65 Fundraising

Fundraising is a fairly new market created by the availability of the on demand supply chain that uses virtual products / user generated content to raise funds for anything from your kids school to a charity to a specialist interest group

It is a great example of how on demand helps create an entirely new marketplace and is currently built almost entirely on the popularity of printed t-shirts

It works as follows

1. Website make available a range of blank t-shirts for fundraisers to add designs and messages too at a set manufacturing price 2. Fundraisers create their own t-shirts online and decide what price they want to sell at 3. Fundraisers then promote them to their fans, members and friendship order them on the website 4. T-shirt are then either produced on demand or orders consolidated and printed in bulk 5. T-Shirts are sent to the people that have ordered them and fundraisers get a payment for the profit

Here are examples of some of the leading fundraising websites

● Teespring - teespring.com ​ ● Custom ink - www.customink.com/fundraising ​ ● Bonfire - www.bonfire.com/ ​

Growth Drivers

● Ability to design online ● Printing technology to male low volume cheaper ● Desire to raise money for a wider vaRiety Of courses ● Competitive nature of charity sector

Barriers to Entry

● Cost of acquisition how will people find out ● Potential capital of setting up the website

Main Printing Equipment Used

● DTG ● Sublimation for Gifts ● Digital for Photo Books

There is a pretty established supply chain of DTG printers

This market is completely driven by user generated content and the main product categories for fundraising are t-shirts, drinkware and bags

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On Demand Business Models Explained Page 34 of 65 Monetising Your Assets

We have added this as a new business area as it is a very popular way of using on demand products. It is similar in concept to several other areas like print on demand, photo / personalised gifts & in store personalised products but covers a slightly wider business area and we think deserves its own section

We are fairly sure people will continue to innovate in this area and create and identify new business models. It would certainly be true to say this is a business area created by on demand

Assets can be split into the following broad areas

● Artists, designers & photographers ● Image archives ● Brands / Organisations ● Fans, followers or members

Detailed below are some examples of companies effectively monetize their assets

● Mirrorpix Image Archives - www.mirrorpix.com ​ ● Event & School Photographers - www.htempest.co.uk ​ ● Team Talk Popular News SIte - www.teamtalk.com ​ ● Stephen Brown Art - stevenbrownart.co.uk/ ​ ● Various Influencers - heartsbytiana.com/ ​

Growth Drivers

● Awareness of supply chain / platform ● Social Media ● Digital storage options

Barriers to Entry

● Needs an audience ● Well indexed archive ● Need a technology platform

The main printing equipment used depends entirely on the products and is pretty much the same as photo or print on demand products . The same can be said about supply chain with well established options detailed in the other sections

As discussed above products can be anything but some good examples would be

● Fan Based Merchandise - T-shirts, mugs & notebooks ● All types of Wall & Desk Art ● Photos in a folder

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On Demand Business Models Explained Page 35 of 65 Promotional Merchandise

This is a business to business marketplace (B2B) that has traditional been quite a cottage industry managed by a large number of small distributor companies who manage the customers and purchase products from an established specialist printing company who purchase, stock and in some case blank products

It has many of the same characteristics of the web2print market with set up charges, complicated ordering process and minimum order quantities so is likely to experience a similar level of market disruption over the coming years

It can be divided into 2 main end user customer types

Corporate Programmes Based on Stock

These are usually run for larger companies who buy large volumes of products to get better prices and these are then stored in a warehouse and distributed to various locations when needed by sales and marketing teams - this represents around 40% of sales. If you have been reading this white paper it will be fairly clear that as the on demand prices come down the opportunity to supply corporate programmes on demand or via regional print partners will become more and more attractive

One Off Purchase with a Minimum Order

Mainly for mid sized rather than smaller companies because of the current minimum order quantise on demand represents a great opportunity to expand the overall market place as the no minimum order principle will enable smaller companies to purchase lower volumes

Many promotional products companies are active in both market areas and detailed below are some examples of the leading companies and their specialities

● Brand Addition - www.brandaddition.com ​ ● 4Imprint - www.4imprint.com ​ ● National Pen Company - www.pens.com ​ ● iPromoteU - ipromoteu.com - franchise ​ ​ ● Pen Warehouse / Snap Products - trade only supplier that has seen the winds of change - www.snapproducts.co.uk

Growth Drivers

● Lower minimum order quantity will increase overall market size ● Printing technology enables more products to be branded ● Increased awareness of products and effectiveness by marketing professionals ● ECommerce technology will make corporate programmes more affordable for smaller companies

Barriers to Entry

There are very few current barriers to entry which is why the market consists of a large volume of smaller companies - however in the future we would expect the following to become more important

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On Demand Business Models Explained Page 36 of 65

● Requirement to invest in new digital equipment ● Awareness of web technology to run effective corporate programmes ● Access to online preview & proofing

Main Printing Equipment Used

● Traditionally have used technology like Screen & Pad Printing ● Sublimation Print becoming more popular ● UV printing offers flexible but fairly expensive decoration options ● DTG & Embroidery for On Demand Clothing ● Engraving for more executive gifts

There is a very established supply chain but it is focussed mainly on the way the market currently works although there are now an increasing number of suppliers investing in digital equipment so options are becoming increasing available

The main product categories can be classified as follows

● Pens & Writing ● Mugs & Drinkware ● Clothing & Apparel ● Office & Desktop Gifts ● Bags, Cases & Accessories ● Umbrellas & Outdoor ● Food, Drinks & Confectionery ● Toys & Games ● Notepads & Stationery ● Home & Living ● Gadgets & Travel ● Diaries & Calendars

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On Demand Business Models Explained Page 37 of 65 Web2Print

This is predominantly a business to business (B2B) marketplace and along with greetings cards is perhaps the best example of how a market has already been changed by on demand products & technology

Web2Print is predominantly about business stationery, marketing collateral and invitations / labels. It was traditional served by local printers but has moved very much online because of the fact that this would make the proofing process easier and eliminates set up charges historically charged by printers

By harnessing modern website technology to make what can be a complex order process simpler by using templates, provide live preview and enable online approval with computer aided manufacturing (CAM) to reduce production costs the web2print industry has improved customer choice, reduced prices / lead times and improved the overall customer experience

Many web2print providers have now moved onto to other market sectors that have set up charges like promotional products to see how they can disrupt these markets too Photo and personalised gifts is another logical step too as this uses the same preview and proofing technology

Here are some examples of some of the leading web2print companies

● Vistaprint - www.vistaprint.co.uk ​ ● Hello Print - no online designer - helloprint.com ​ ● Moo - www.moo.com ​ ● Signomatic - www.signomatic.co.uk ​ ● House Name Plate - www.housenameplate.co.uk ​ ● Wedding Invitations - www.paperthemes.co.uk ​

Growth Drivers

● Tangible customer benefits like reduced prices and easier ordering ● Computer aided manufacturing reducing prices and increasing profits ● Advances in website and browser technology ● Awareness of companies of lower minimum order volumes

Barriers to Entry

● To make profitable companies need integrated manufacturing which can be expensive to implement and needs the latest printing equipment ● Now it is a highly competitive marketplace ● Need strong SEO skills to drive visitors to your website ● Takes time to set up all the products and templates you will need to be a success

Main Printing Equipment Used

● High volume digital printing equipment like HP indigo ● Sublimation Printing for Business Gifts ● Wide Format Printing for Display Products

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On Demand Business Models Explained Page 38 of 65 There is a pretty established supply chain and many of the established web2print providers are now opening up their computer aided manufacturing to other organise so moving to also becoming a trade supplier. The best example of this is Vistaprint who are branded as CIM Press

The main products sold can be split into 2 main areas detailed below. As mentioned above many web2print providers also move into other categories too like promotional and personalised gifts

Business Stationery

Used by almost all businesses these are predominantly paper based products printed on large direct digital print machines. The most popular product categories are detailed below

It could be argued that this is a declining market as more and more information is sent online however product innovation and category expansion has seen demand remain steady

● Business Cards ● Other Business Stationery like invoice templates, letterheads ● Labels ● Marketing Leaflets & Brochures ● Display & POS Products ● Business Gifts

Invitations

Lots of online sites now offering these simple products but still good sales volume for wedding invitations, orders of service and party invitation. There are also many niche areas like funerals which are serviced in a more traditional way and a market likely to become disrupted by print on demand

Signs, Display & Point of Sale (POS)

Another traditional area that has seen huge change driven by modern wide format printers and new substrates

Main product categories are deleted below

● Exterior & Pavement Signs ● Banners & Flags ● Exhibition Banners & Stands ● Instore Displays ● Warning & Information Signs

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On Demand Business Models Explained Page 39 of 65 Workwear, Teamwear & Uniforms

Workwear is often considered part of the promotional products industry but with uniforms and teamwear becoming more available on demand it is now more than big enough to represent its own category.

Adding a brand, badge or logo to some form of sports or workwear is a long established market and has always been subject to minimum orders and set up charges. The evolution of on demand has had a really disruptive effect on this marketplace already

● By enabling smaller companies to order small volumes of branded workwear at affordable prices ● By reducing the different ranges of school uniform needed to be stocked as school badges can be embroidered on demand ● By changing the supply chain for teamwear by enabling bespoke kits to be created in small volumes using sublimation ● By enabling personalisation to be added in store as an up sell in both the sports & uniform markets

These changes affect both the business to business (B2B)market for company workwear and the teamwear / school uniform market which are typically business to consumer (B2C)

The ability to provide workwear / uniforms is also likely to change buying behaviour moving forward as for example the US market has traditionally been larger per person for branded workwear but now it is more easily available in other regions these are likely to increase prorated to a similar level

The technology both front end and back end is the same but the applications are different in the different market sub sectors as defined below

Workwear

This is normally about adding a companies logo or brand to clothing used for work - it can sometimes be personalised too to eliminate the need for a name badge. The main advantages of the on demand world to workwear are smaller batch quantities possible, less stock needs to be held / manufactured and a wider choice of product types can be catered for

School Uniforms

This is typically about adding school badges to uniforms which is normally done with embroidery and ability to do this on demand has also meant less stock needed and as mentioned above changes to the supply chain .

Name tags have typically been applied by parents but with modern personalisation methods it is also now possible to get these added when the school badge is embroidered on demand for very little extra cost. Looking to the future it is even possible to use RFID technology in uniforms so that this could help identify where children were within the school building

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On Demand Business Models Explained Page 40 of 65 Teamwear

This sector has benefited from many of the detailed in the workwear and uniform sections above but has a couple of other unique benefits that are just teamwear related

Personalisation has meant that lower level teams now have player names on their list at very little extra cost but perhaps the most interesting of all is the ability to create and print bespoke teamwear from scratch using sublimation. This means that a kit can be created online for an individual then sublimation printed on a roll of white fabric, pattern cut out of the roll and sewn together then delivered within 48 hours

The cult of celebrity has also seen a fairly dramatic rise in sports fans wanting the name / number of their favourite player of the back of their kit which can achieved onsite and online using heat transfer technology

Here are examples of some of the leaders in the above market sectors

● Workwear Express - www.workwearexpress.com ​ ● Clothes2Order - www.clothes2order.com ​ ● School Uniforms - myclothing.com ​ ● EV2 Kit Builder - www.ev2sportswear.com ​ ● Player Layer - playerlayer.com ​

Growth Drivers

● Advances in printing and manufacturing technology ● Online ordering and data capture capabilities ● Awareness of possibilities in markets ● Consumer demand for additional options

Barriers to Entry

● Supply chain needs to invest in the latest equipment ● Websites need updating to allow modern ordering methods ● Lack of awareness in some sectors of the market on what is possible ● Traditional market structure quite conservative ● For embroidery specialist manufacturing files still need creating

Main Printing Equipment Used

● Embroidery for logos / badges ● DTG for garment printing ● Sublimation for teamwear ● Vinyl transfers for sports numbers

There is a pretty established supply chain for on demand embroidery and garment printing with most of the suppliers gearing themselves up for the on demand world. As it stands there is a more limited supply

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On Demand Business Models Explained Page 41 of 65 chain for affordable small volume cut and sew but this is changing everyday as manufacturers showcase their new technology

Garment manufacturers only tend to deal direct for larger volumes and their is a fairly well established distribution network who are happy to provide any quantity - the right workflow can order on demand as well as printing on demand minimising inventory

Consignment stock also common so stock management also an important area to consider - this applies to other areas too

The main product categories are listed below but there is a huge variety of options in these market sectors

● Polo Shirts ● Bags & Caps ● Protective & HiViz Workwear ● High Performance Sportswear

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On Demand Business Models Explained Page 42 of 65 Sales Promotion & Premiums

Brands using merchandise for a sales promotion have traditionally had to order large volumes but now with on demand they can order personalised promotions, higher value premiums and short run promotions and have more flexibility to create innovative campaigns

Personalised promotions are becoming very popular with advertising agencies after high profile successful campaigns for Coca Cola, Nutella and Marmite

Here are some examples of how brands have used sales promotions

● Share a Coke - personalised labels on bottles that increased product sales and then lead to a range of merchandise being available ● Nutella - personalised labels created instore and online with peoples names replacing the work Nutella ● Toblerone - adding names to Toblerone boxes which has now crossed over to becoming a popular personalised gift all round the world ● O2 Premiums - offering a free Star Wars phone case to be redeemed online to O2 premium members ● LG Phone - offering a free phone case gift card in the packaging of a new phone release that could be redeemed online ● Dove Soap - offering a personalised formulation of the product as well as personalised packaging ● Robinson’s Personalised Water Bottle - launched at Wimbledon Tennis and offering the ability to personalised a branded water bottle on site and then due to popularity rolled out online ● Personalised Spoons - earned by collecting tokens on cereal packets and redeemed via a web page

Sales promotions are usually given for free but Interestingly quite a few sales promotions have crossed over to become popular personalised gifts and are being sold everyday around the world and have gained cult followings

Growth Drivers

● Success of personalised campaigns ● Evolution of both websites and printing technology ● Desire from agencies to create something different and unique

Barriers to Entry

● Need ability to collect personalisation data and then auto create artwork to ensure easy and quick process ● Lack of flexibility on brand websites to implement campaigns ● Awareness at advertising agencies that the platform to do this is available off the shelf ● Can be time consuming to deliver in store

Main Printing Equipment Used

● UV Printing for Packaging & Products ● Sublimation for Gifts & Cases

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On Demand Business Models Explained Page 43 of 65 ● Inkjet for labels and paper

There is a pretty established supply chain for gifts and giveaways and a developing one for companies happy to print on other people's products

The main product categories for giveaways tend to be clothing, drinkware and packaging

The market for premium giveaways has also developed considerably thanks to on demand with brands not having to commit to large stock volumes and more up market products being made available off the shelf for dropship fulfilment

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On Demand Business Models Explained Page 44 of 65 Print On Demand

This has been the fastest growing market and perha[s the most disruptive because ad digital printing has improved eCommerce retailers are choosing to adopt a dropship model and only hold blank stock and print the t-shirt design only when ordered - either themselves or more commonly via a drop printing specialist

This is totally changing the licensed merchandise market with companies able to offer wider ranges and have less risk in money tied up in pre-printed stock

Most of the t-shirts listed on Amazon are produced on demand and Amazon itself has now become the biggest TShIrt Printer in the world and has multiple t-shirt printing facilities stocking only plain t-shirts and printing on demand

After on demand virtual stock this currently represents the next biggest volume sales opportunity for retailers and like Amazon many are also interested in the extra margin they can generate by adding a digital print machine to their warehouse

Like personalised or mass customised products print on demand is typically used for producing a single unit on demand but is now also expanding to producing small batches as well

Detailed below are some examples of specialist print on demand marketplaces - most sites selling t-shirts are now using print on demand whether the retailer / consumer is aware or not as in this case, this is really just a fulfilment strategy rather than a specific feature or selling point.

● Zazzle - www.zazzle.com/ ​ ● RedBubble - www.redbubble.com ​ ● CafePress - www.cafepress.co.uk ​ ● Threadless - www.threadless.com ​ ● Spreadshirt - www.spreadshirt.com ​ ● CustomInk - www.customink.com ​

Growth Drivers

● Demand for Choice - the long tail ● Improved Printing technology ● Trading conditions - looking for lower risk strategies ● Increased share of market supplied by ECommerce ● Increased awareness of business model ● Availability of more content art, photo, designs and licensed assets

Barriers to Entry

● Investment in automation for websites needed ● Custom ERP needed for production - not many designed just for on demand ● Traditional mindset still in place at many retailers ● Expensive equipment if doing yourself ● Base Cost Price per unit still higher than mass produced screen printed product

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On Demand Business Models Explained Page 45 of 65 Main Printing Equipment Used

● DTG for apparel ● Sublimation for a wide range of products ● Transfer for t-shirts and products not suitable for sublimation ● Digital for paper products ● UV - limited range of products but will increase as technology improves

There is a pretty established supply chain now with many traditional printers changing their business model to focus on digital short run production

A specialist print on demand supply chain business sector has also emerged with many companies offering designers a hassle free way to create products using their platforms

● Printify - printify.com/ ​ ● Printiful - www.printful.com ​ ● Kite - www.kite.ly ​ ● Gooten - www.gooten.com ​ ● Licensed - www.virtualproductwarehouse.com ​

Our own business Custom Gateway provides a platform that all stakeholders can use and links to both this new breed of suppliers alongside digital print specialists

There are now hundreds of different products categories available but at the moment the most popular product categories for print on demand are detailed below

● Clothing & Apparel ● Mugs & Drinkware ● Textiles ● Cases & Bags

Many industries are starting to see the opportunities of harnessing print on demand and detailed below are some examples of more innovative applications

Fast Fashion

As the name suggests when a retailer wants to get a design available fast they are now using print on demand to print small print runs.

This enables them to respond faster than ever before to a specific event or new trend and also ensures they do not have to gamble with a large stock order. It also means a wider choice can be made available

This is often then combined with a more traditional approach where the best selling designs are ordered in larger volume for sale in physical retail outlets or to reduce cost prices

As mentioned earlier in this section with the cost prices for print on demand falling unless retailers want to sell products in store they are now often not changing from the print on demand model

Retailers also now use print on demand for limited edition ranges too

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On Demand Business Models Explained Page 46 of 65 User Generated Content

This is what sites like Zazzle & Reed Bubble offer primarily focussed on artists they enable them to create products featuring their art which are then sold on their own marketplaces

The evolution of this model enabled by the Custom Gateway Platform is allowing artists, photographers and designers to create virtual products that can be sold on any platform - for example uploaded to Amazon, sold on SOcial media or an artists own Shopify store

Brand Extension

Many brands have crossed over and used their logo / identity on a different range of products like construction equipment manufacturer Caterpillar adding their branding to clothing. Print on demand makes this option more accessible to smaller companies fund enables almost any brand with a strong logo / brand to build product ranges in new areas

Licensed Content

Print on Demand is particularly appealing to the licensed merchandise industry as it addresses several of the traditional weaknesses of that specific business model

It eliminates the possibility or redundant stock, it allows a wider range to be offered and perhaps most importantly it ensures that retailers never run out of the best selling designs as more can be printed on demand

Please also take a look at our separate White Paper focussed on “Understanding Print on Demand Products” and available at https://www.custom-gateway.com/white-papers/

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On Demand Business Models Explained Page 47 of 65 Stock on Demand

Also commonly known as Dropship or Virtual Stock this really does change traditional markets. For many this marketplace is also known as Direct Despatch

This is the biggest potential market in this paper as ultimately can be any product category and is likely to increase very rapidly over the next few years

With millions of pounds invested in stock sitting in warehouses around the world everyone is focussed on increasing stock turnover per year so if a distribution centre or warehouse can accommodate on demand stock orders. Then it has the potential to become part of the global supply chain

By identifying brands with the technology to provide virtual stock retailers are able to adopt a marketplace model and complete better with the increasing dominance of other marketplaces

Here are examples of some leading sources of dropship stock for smaller retailers https://www.oberlo.co.uk/verified-suppliers https://www.aliexpress.com/country/gb-united-kingdom.html https://www.salehoo.co.uk/about-us/

Here are some examples of retailers who have harnessed virtual stock to create their own marketplaces

● Walmart ● Next ● Game

Growth Drivers

● Improved technology to connect retailers & suppliers ● Brands looking to utilise stock better ● Retailers looking for ways to compete with marketplaces ● Consumers expecting more choice ● Improved global shipping solutions

Barriers to Entry

● Warehouse Management System ● Investment in older business models ● Websites and systems not coping with dropship ● Old fashioned mindset ● Integrations

Systems Required

● Ability to consolidate single orders ● ABility to create branded packaging for different retailers ● Connection to a suitable shipping provider

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On Demand Business Models Explained Page 48 of 65 As it stands not that many suppliers are on demand ready but many are starting to think about this model and can re-act quickly if they can adapt their existing commerce fulfilment

The potential product categories are pretty much unlimited -

Direct despatch is pretty common in the following areas as the products have not traditionally been easy to warehouse

● Home Furnishing - too big ● High Value Items - too expensive ● Perishable Items - need specialist transport

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On Demand Business Models Explained Page 49 of 65 Printables

Almost a 100% margin these are truly digital products that are purchased online and downloaded to print at home

These have become more viable as home printers have continued to improve in quality and the evolution of technology in areas like 3D printers are only likely to gain popularity.

Some good examples of who currently does this model well are

● Etsy - www.etsy.com/market/printables ​ ● KikkiK - different approach - www.kikki-k.com ​

Growth Drivers

● Advance of home printing technology ● Wider range of designs available ● Acceptance of paying for content ● Consumer desire for faster solutions ● Retailer search for more profitable product lines

Barriers to Entry

● Needs a different buying and fulfilment process ● Concerns over controlling counterfeiting ● Requirement for supplier to know what is being sold ● Limited customer niche at the moment

Main Product Types

● Stationery, Cards & Invitations ● Party & Seasonal Decorations ● Posters & Wall Art ● Labels & Stickers

There is a limited supply chain at the moment based on the barriers to entry

Kiki K have an interesting approach where they sell the base template and then you get to print at home creating a more advanced product

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On Demand Business Models Explained Page 50 of 65 Marketplace Traders

As marketplaces now account for 60% of global eCommerce revenue so although most of the product groups will have been covered in previous sections they warrant their own section

All of the marketplaces totally get on demand fulfilment it is what they have built their business models on but not all of them yet understand mass customisation as it is a smaller category and requires additional development. It is certainly true to say that marketplaces are the ultimate demonstration of the disruptive power of the on demand business model

There are an increasing number of individuals and small businesses that make a living trading on marketplaces who are often more effective at driving sales than larger companies - they have realised that it is just as easy to sell somebody else's stock than invest in their own - it also makes it quicker for them to list new products and change strategies to accomodate trends. So although working with traders may reduce available profit it is an increasingly popular strategy.

Marketplaces are also being used by suppliers to sell direct to consumers helping them increase profit margins and reduce reliance on retailers. This strategy is a real market disruptor and does lead to some retailers refusing to list products from suppliers trading direct but is becoming increasingly common

There are now hundreds of marketplaces globally with different regions of the world having different market leaders. The exciting thing about marketplaces is that with a global dropship network if you are successful in one marketplace there is no reason why you cannot start to trade in other marketplaces

Details below are some of the main marketplaces and the territories. They cover

● Amazon - global coverage ● Alibaba / TMail - currently mainly China ● JD.com - currently mainly China ● eBay - global coverage ● Etsy - craft focused with global coverage ● cDiscount - France ● Lazada - South Asia ● Rakuten - Japan ● Otto - Germany ● Zoolander - Germany ● Hard to Find - Australia ● Not on the High STreet - craft focussed in the UK

Growth Drivers

● Marketplaces taking a bigger share of global eCommerce sales ● Marketplaces increasingly looking for new product categories to continue their expansion ● Marketplace technology development like Amazon Custom ● Increased use of multi channel strategies ● Strong search engine positions of leading marketplaces ● Ability to suppliers to trade direct with consumers increasing their margins ● Speed to market for new products Barriers to Entry

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On Demand Business Models Explained Page 51 of 65

● Getting harder to set up a supplier account ● Not always front end support for personalised products ● Different marketplaces have different admin systems ● Can be a lot of manual processes

Main Product Categories Sold

● Print On Demand T-Shirts ● Personalised Gifts ● Increasing numbers of Photo Upload gifts ● Home Decor ● Personalised Books & Newspapers

Market places are increasingly aware of the opportunities for personalised products and market leaders like Amazon have now launched Amazon Custom and Amazon Merch in attempt to capitalise

In fact Amazon has now become the biggest on demand t-shirt printer in the world

Although plenty of personalised products are sold on other marketplaces like eBay & Etsy the personalisation can be labour intensive with people having to add in the gift message box and often forgetting altogether Only Amazon currently has live preview and it is fairly limited

Almost all the suppliers detailed in previous sections are happy to supply marketplaces as long as they can get the orders in the right format - for many people this involves a lot of manual process. In fact this has lead to a new software category of marketplace publishing and order aggregation platform again these tend to struggle with personalised

It is well documented the number of marketplace millionaires that have been created and most of them are traders rather than manufacturers as the market place eliminates the cost of sales and delivers customers for the right product offer, Everyone is equal on Amazon a flashy website does not make the difference

This trend will only continue and marketplaces are a great starting point for any business wanting to sell on demand products

There is however a word of caution that when your business gets dependant on the orders from a marketplace you are vulnerable if they ever suspend your account or set up in competition. There are just as many companies that have been driven out of business after becoming very successful as there are millionaires created.

Becoming Your Own Marketplace

There is also an increasing trend for ecommerce website with strong visitor number to adopt the marketplace model in reverse and use on demand products to become their own marketplace. A good example of this strategy can be seen on www.next.co.uk/branded ​

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On Demand Business Models Explained Page 52 of 65 Conclusions

It is clear that On Demand is certainly disruptive and is seen by many to be driving the Fourth Industrial revolution so ultimately companies that choose to ignore it will get left behind and either miss new opportunities / markets or become uncompetitive in their own markets as they get disrupted by technology

This white paper has hopefully given you more insight into the potential markets and provide some help on how you could shape your strategy going forward

What became clear in writing the paper is the diversity of different on demand models and the different approaches needed to be successful, that said they all had a few things in common

● Technology is driving ● Consumer attitudes are changing ● Awareness of what is possible is increasing ● Marketplaces are becoming more dominant ● Improving logistics is making our world increasing smaller

We hope this white paper has helped show the scope and wide ranging impact of change but will undoubtedly be out of date the moment it is published due to the unprecedented speed of change of the Fourth Industrial Revolution (as defined by the World Trade Organisation)

Although as a software company we believe technology provides a solution to many of the challenges identified it will not work in isolation and markets also need motivated and integrated supply chain

Supply Chains like the on demand business is at an embryonic stage but more and more organisations are now investing in the right technology to support the future and are offering the right products, decoration techniques and services identified in this white paper

Our mission is to provide the right tools to reduce the barriers to entry and at the same time build a network of like minded organisations that understand the on demand business model and want to be part of the future

The infographic on the next page highlights what a recent report feels are the key strategies for personalised gift retailers many of which are also very relevant to other on demand markets such as

1. Marketing products to new market sectors / niches 2. Creating more focussed products designed for niche consumers 3. Integrating different channels for a more coordinated approach 4. Increased use of the marketplace model - see page 51 5. Increased visibility of on demand products instore - see page 28

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On Demand Business Models Explained Page 53 of 65

As both the Deloitte & Forbes reports (see References p65) demonstrate that on demand and especially personalisation is here to stay

The diagram opposite illustrates some of the main reasons why consumers like personalised products helping explain why they are experiencing double digit sales growth in many market sectors

We hope this white paper has inspired you to get involved and we are always happy to talk on demand

Andrew Talbot

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On Demand Business Models Explained Page 54 of 65

Appendix

The final section of our white paper provides some more details on market size, our software platform, how we help overcome some of the barriers and details on where we sourced some of the background for this white paper

How Technology Helps Reduce The Barriers To Entry & Harness the Market Drivers 56 Overview of How Markets Are Enabled 58 Summary of On Demand Decoration Options 62 Estimated Market Values 64 References 65

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On Demand Business Models Explained Page 55 of 65 How Technology Helps Reduce The Barriers To Entry & Harness the Market Drivers

By reading this paper I am pretty sure you will now have found an area of on demand fulfilment that is of interest to you so suspect you may be considering what the barriers to entry would be for your organisation

Detailed below is a summary of the main barriers to entry that have been explored in each potential marketplace in this white paper and some examples of how technology platforms such as Custom Gateway can help overcome these

● Current eCommerce Platform Limitations - easy to use API, Smartlinks & Smartcodes mean a ​ single integration in your website can enable all of these potential markets ● Legacy Back Office Systems - our specialist dropship order management system uses APIs, ​ Webhooks & secure data transfer to manage these processes for you ● Product & Supply Chain - lack of awareness of available suppliers and products can be overcome ​ by using our global supplier network / partners ● Cost of Integrations with required third party platform - can be eliminated as we have already ​ written free modules to 100s of retailers, supplier, ERP / WMS software and carriers ● Product Setup Costs are drastically reduced by using our wholesale blanks as part of the creation ​ process

The infographic below shows the main market drivers as identified by Technavio. Our platform can also help you make the most of these by providing a wide range of on demand seasonal gifts from leading suppliers via our Virtual Product Warehouse, market leading on screen previewers / product builders and integrated instore personalisation options

The next section is all about how technology can be applied to the individual market sectors “How Markets Are Enabled”

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On Demand Business Models Explained Page 56 of 65 Overview of How Markets Are Enabled

The table below lists the market sectors identified in this paper and shows how once you have added Custom Gateway to your website how our technology can help you tackle the barriers to entry identified in the previous section and main challenges identified to start selling in each sector

All sectors identified require a tool like Gateway OMS to route orders and automatically manage the direct despatch / dropship order process so the chart below just identifies the key additional requirements rather than repeat this point each time

Main Market On Websites In Back Office Available Supply Comments Chain

Photo Gifts Provide Photo Generate print Established global Represents nearly Upload & Editing ready artwork & supply chain 40% of the Tools enabling Click & offering a wide personalised market Collect range of products with a limited number of SKUs - so quick win

Personalised Smartlink live Generate print Big database on 60% of the Gifts previews or ready artwork & www.virtualproduct personalised Smartcode extra customer service for warehouse.com market. See also data capture changes Content Types on p5

Flowers Need ability to send Ability to manage Large trade to different availability & multi wholesalers addresses product fulfilment focussed on bigger retailers

Greeting Cards Smartlink live Generate print Established network Lots of content preview essential ready artwork & of digital printers - available too in but also need size customer service for but do need to www.virtualproduct options changes batch artwork to warehouse.com make economic

Gift Cards Smartlink live Generate print Limited supply chain previews or ready artwork & due to security Smartcode extra customer service for implications but data capture changes available

Gift Experiences Need to manage Need to allocate a A few wholesalers redemption as well code number available but as selling fragmented supply chain

Personalised Smartlinks as a pop Generate print For practica;ity this We can help put Anything up option if ready artwork & usually happens in together packages personalisation customer service for retailers own for your own selected on a changes warehouse. So warehouses standard product integration with print equipment essential

Made to Order Need more complex Dynamic pricing and Limited at the Using our unlimited smartlinks to deal picking lists of moment but attributes we can with attributes components. Plus a increasingly as support almost any

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On Demand Business Models Explained Page 57 of 65 Stock management technology makes Made to order module also needed this more possible options

Made to Measure Same as made to Ability to turn Limited at the We can also provide order but need to customer selections moment but component lists for capture into patterns for modern production on demand measurements automated cutting / options will make fulfilment using text fields printing machines this more common place

Home Decor Can still use Generate print Specialists are smartlink links but ready artwork & starting to emerge need different customer service for as photo gift layout changes suppliers diversify

Incentives, Smartlink live Generate print Traditionally done Trophies & previews or can get ready artwork for by the small shops Rewards away with the different but contract Smartcode extra decoration methods dropship engravers data capture but & customer service are easy to find now need to consider for changes options for multiple name upload

Instore Need POS Generate print Plenty of machines We can help put Personalisation Smartlinks but need ready artwork & now available for together total to decide what make available for instore printing - packages for your internet enabled instant printing some can be instore production device / kiosk to use usually after restrictive scanning a POS expensive for receipt volume purchase

Souvenirs Depends if print on Generate print Personalised demand or ready artwork for product wholesalers personalised but both saved designs / are a good starting Smartlink live personalised point but not too previews or options & customer many souvenir Smartcode extra service for changes specialists at the data capture moment

Fundraising Again need a Generate print As main products custom smartlink ready artwork, hold are t-shirts there are with extra eb orders for plenty of dropship development as consolidation & DTG printers who have a very specific customer service for will offer on user journey to changes demand fulfilment support

Monetising Your Depends if print on Generate print Plenty of supplier We can guide Assets demand or ready artwork from blanks available in brands / designers personalised but saved designs or CPP make it easy for on the easy way to Smartlink live personalisation & people to select monetise their previews or customer service for product types and assets Smartcode extra changes create their own data capture products - all blanks have many printer options

Promotional Smartlink live Manage an Very established Merchandise previews, simple automated proofing supply chain not print ready artwork process or generate that many use to upload or email for print ready artwork small orders but

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On Demand Business Models Explained Page 58 of 65 order upload increasing number on our network now invested in digital

Web2Print A custom smartlink Generate print Probably the most Templates are link for digital ready artwork & developed supply essential to guide products plus plenty batch together chain that can be users and are of example small jobs to make harnessed as available at templates larger print runs technology exists to www.virtualproduct (known as Computer easily batch small warehouse.com Integrated orders Manufacturing)

Workwear Smartlink live Generate print There are plenty of previews or ready artwork (plus dropship DTG Smartcode extra generating printers & contract data capture ideally embroidery files) & embroiderers who with embroidery customer service for will offer on emulation changes demand fulfilment

Teamwear Smartlink Kit Builder Generate print More limited market both Design Your ready artwork from at the moment but Own & Select components and laser cutters are Options batch together plus now meaning we customer service for have a few more cut changes & sew specialists joining the network

Uniforms Smartlink to Select Generate print There are plenty of Badges / Logos ready artwork from contract logo galleries (plus embroiderers who generating will offer on embroidery files) & demand fulfilment customer service for changes

Sales Promotions Display fixed Generate print Similar supply chain product options ready artwork from to promotional sometimes with previously saved products personalisation designs options for online purchase

Print on Demand Little change on Generate print Lots of companies Our CPP has tools to from end unless you ready artwork from now offering print help you set up want to visualise saved designs on demand services artwork, thumbnails different colour in almost all product and multiple options categories product types automatically which is essential to make POD work

Stock On Demand No change on front Generate stock pick Rands supporting end unless you want list in the right their own direct to display live stock format for third ecommerce make values from CPP party warehouses effective suppliers and branded here as they are dropship paperwork used to drop shipping small quantities but many major brands do not yet have the IT tio

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On Demand Business Models Explained Page 59 of 65 support

Printables Smartlink live Allow the download Very limited at the previews or select of print files once moment as print on demand orders paid for companies do not image for download want to release thri designs without being confident they will earn from them. Tech solutions and better printers at home will change this

Marketplace Dependant on Build artwork from Many brands are Traders marketplace but can text captured or trying to control usually use standard manage a post themselves but features for extra personalisation there are still lots of data capture email option to use options in a smartlink to auto www.virtualproduct generate artwork warehouse.com

Becoming Your Dependant on the Much like on More and more each Own Marketplace type of products demand stock week are making you want to sell manage stock products available For stock no change picking in the right helped by our on front end or format for different integrations and Smartlink live suppliers easy to use APIs previews / Smartcode extra data capture for personalised

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On Demand Business Models Explained Page 60 of 65 Summary of On Demand Decoration Options

This paper focuses on digital and direct production techniques only and the chart below identifies the main decoration techniques used in each section

Method Used Mainly for Key Advantages Key Disadvantages

Sublimation Photo Gifts Vibrant colours and Only works on Personalised Gifts very durable finish polyester for fabrics Teamwear Promotional Cost effective for small 2 stage process so fairly Print on Demand batches labour intensive

DTG Workwear Eliminates set up times Unit cost still more Print on Demand and enables faster than screen printed Fundraising production

UV Photo Gifts Prints on many Printers currently quite Personalised Gifts different substrates slow compared to other Personalise Anything and no secondary on demand equipment Promotional processing needed Instore Personalisation

Digital Greetings Cards Fast & cost effective Can only work with a Web2Print and easy to batch small limited range of media Calendars jobs together and the best machines Personalised Books have a high capital purchase cost

Embroidery Workwear & Uniforms Very durable high A fairly slow Personalise Anything quality personalisation technology designed Instore Personalisation method only for text and simple images

Engraving Trophies & Awards High quality finish Fairly slow and limited Executive Gifts designed mainly for to single item at a time Instore Personalisation metal, wood & leather products

Transfer Personalised Gifts Cost effective and Labour intensive to Print on Demand flexible weed designs and heat Monetising Your Assets press

Photo Sublimation Photo Prints Paper and ink in a Expensive and slow Posters single cartridge compared to digital produces a very high quality photo print

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On Demand Business Models Explained Page 61 of 65 Wide Format Signs & Banners Cost effective and fast Home Decor for large areas or batched together transfers

Label Printers Personalise Anything Very flexible and cost Not very durable and Personalised Alcohol effective low end of the market Personalised Packaging Made to Order

Custom Gateway partner with most of the leading on demand print manufacturers so we can offer an integration solution of both software and hardware

We can help suppliers wanting to get involved with on demand fulfilment, retailers wanting to adoption the personalise anything model or attraction wanting to personalise onsite

You can find more details on the print partners page our website www.custom-gateway.com/integrations/printer-machine-partners/

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On Demand Business Models Explained Page 62 of 65 Estimated Market Values

It is difficult to establish the potential value of many of the markets we have identified because of

● Taking market share ● Fragmented supply chain ● Blurred lines

Market Group B2B or Maturity Estimated UK Estimated Global Value Value B2C £s MIllion £s MIllion

Photo Gifts Virtual Products B2C Mature 1,000 20,000

Personalised Gifts Virtual Products B2C Developing 1,500 30,000

Flowers Made to Order B2C Mature 1,000 20.000

Greeting Cards Virtual Products B2C Mature 300 6,000

Gift Experiences Virtual Products B2C Developing 100 2,000

Gift Cards Virtual Products B2C Mature 9000 180,000

Personalised Anything Virtual Products B2C New ?

Made to Order Made to Order B2C Developing 250 5.000

Made to Measure Made to Order B2C Developing 1000 20,000

Home Decor Virtual Products B2C Developing 200 4,000

Incentives & Trophies Virtual Products B2B Developing 400 8,000

Instore Personalisation Virtual Products B2C Developing 500 10,000

Souvenirs Virtual Products B2B Developing 200 4,000

Fundraising Virtual Products B2C Developing 250 5.000

Monetising Your Assets Virtual Products B2C New 500 10,000

Promotional Merchandise Virtual Products B2B Developing 1000 20,000

Web2Print Virtual Products B2B Mature 1500 30,000

Workwear & Teamwear Virtual Products B2B Developing 750 15,000

Sales Promotions Virtual Products B2B Developing 300 6,000

Print on Demand Virtual Products B2C Developing 3000 60,000

Stock On Demand Dropship Stock B2C New ?

Printables Virtual Products B2C New 10 200

Marketplace Traders Virtual Products B2C Developing 200 4,000

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On Demand Business Models Explained Page 63 of 65 Organisational Changes Needed for Mass Customisation

This useful chart below comes from the MicKinsey report “How Technology Can Drive the next Wave of Mass Customisation” and explains some of the business changes that might be needed to help companies make mass customisation a central plank of their business strategy

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On Demand Business Models Explained Page 64 of 65 References

● Global Personalized Gifts Market Survey 2017-2021 by Technavio.com www.technavio.com/report/global-personalized-gifts-market-analysis-share-2018 ● Made to Order - The Rise of MassPersonalisation - Deloitte www2.deloitte.com/content/dam/Deloitte/ch/Documents/consumer-business/ch-en-consumer-b usiness-made-to-order-consumer-review.pdf ● Making It Personal - Bain & Co www.bain.com/insights/making-it-personal-rules-for-success-in-product-customization/ ● How Technology Can Drive The Next Phase of Mass Customization - McKinsey www.mckinsey.com/~/media/mckinsey/dotcom/client_service/bto/pdf/mobt32_02-09_masscusto m_r4.ashx ● The Rise of a New eCommerce Category That Will Only Grow in the Future - Forbes www.forbes.com/sites/bernhardschroeder/2019/06/04/pay-attention-to-the-rise-of-a-new-ecom mence-category-that-will-only-grow-larger-in-the-future/#f97b57278b65 ● The Long Tail - Chris Anderson - longtail.typepad.com/about.html ​ ● Fourth Industrial Revolution - World Economic Forum - https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-h ow-to-respond/ ● Custom Nation - Anthony Flynn ● Makers - Chris Anderson - en.wikipedia.org/wiki/Makers:_The_New_Industrial_Revolution ​ ● Understanding Mass Customisation & The Business Case for Print On Demand Products - Andrew Talbot - available at custom-gateway.co.uk/white-papers/ ​ ● An introduction to Personalization and Mass Customization - Juha Tiihonen & Alexander Felfernig ​ ​ ● Dropshipping Trendy Products On Shopify / Oberlo - www.oberlo.co.uk/blog/unique-dropshipping-products-sell-2019 ● Portfolio of Example Customisers - productpersonalisationapps.com ​

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On Demand Business Models Explained Page 65 of 65