In 2018 Gelato raised $20 million in funding, the largest amount raised by any tech start up in Norwegian history with VC backing of $50 million in all. Just as AirBnB is the world’s largest provider of temporary accommodation yet owns no hotels, Uber the largest taxi company in the world without owning any cars and Amazon one of the world’s largest retailers with (almost) no shops, Gelato is aiming to become the world’s largest printer without owning any printing presses.
Gelato is already successful. It began as a provider of photobook software, under the Optimalprint brand, evolved into a supplier of marketing collateral using a network of qualified print partners to print and supply close to the point of need. This had grown group revenues to $75 million with a 97% retention rate. Optimalprint continues and uses the Gelato network to produce the millions of greetings cards, photobooks, wall art and mugs, ordered online through its website.
This expanded into printing for corporates and brands that have an international network of offices and showrooms and rather than print centrally and ship vast distances to the point of need, the Gelato network is used to print in smaller numbers close to where the material is needed. It offers the brand greater control over its spend and with a significantly reduced carbon footprint. Gelato has retained these clients as it has grown and has no intention of relinquishing them.
Now founder Henrik Müller-Hansen has his eye set on an even bigger opportunity. It can use the same supply network and distribute and print system for other start up businesses: Gelato will become the world’s largest provider of print services to the vast emerging ecommerce ecosystem.
This was in the works before the pandemic hit and the trend towards online shopping accelerated. It is not going back and now Gelato stands to benefit thanks to what Müller-Hansen believes is a tectonic shift in the industry. “The future of printing is about personalisation and customised products. Printing is being redefined by software,” he says. “The future of printing is about allowing every human being on the planet to send work to the powerful digital presses that vendors have supplied us with over the last two or three years.
“It has always been my vision to leverage all the excess capacity and assets that there are across this industry. It is reckoned there is six times more capacity than demand across the 400,000 printers in the world.”
It is a vision that chimes with that declared by Indigo’s founder Benny Landa when he introduced the first Indigo in 1993, declaring then that thanks to digital printing, everything that can become digital will be digital, adding that the print run of one would be standard in future. This would be by 2000 he predicted. Now 20 years later the stars have lined up to be able to deliver the print run of one. And millions of consumers are ordering personalised print or are receiving it from savvy marketers.
The Precision Proco Group, one of the largest agglomerations of digital print capacity in the UK, is comfortably capable of delivering 50,000 separate orders a day with its new factory in South Normanton able to print individual mugs, photobooks, social stationery, greetings cards, notebooks and more. This is fulfilment on behalf of expanding online retailers where SLAs and order volumes are the order of the day.
While Gelato can work with larger customers, the real opportunity for Müller-Hansen lies at the other end of the scale. There is a proliferation of digital print capacity around the world offering sufficient quality, format and substrate versatility to cope with whatever the micro entrepreneurs that Gelato targets require.
In addition there is the internet and software infrastructure based in the cloud, to support these printers and a vast reservoir of start up businesses using the internet to connect to customers. Not everyone can become a Jeff Bezos, the founder of Amazon, but everyone can launch a web business overnight thanks to easily accessible applications and platforms like Shopify, Woo, Wix, Etsy et al.
Increasingly it seems that everyone is running an online business to replace working for a traditional employer or as a side hustle beyond the capabilities of Ebay. It is reckoned that 85,000 online stores were launched in the UK between March and June last year. Shopify’s growth in the last 12 months has been stratospheric with more than 1 million active accounts around the world. New stores increased 71% between the company’s Q1 and Q2 last year and even more starting up during Q3.
“There’s a shift happening in the world of commerce, and we’ve all felt it,” Shopify said in the report. “2020 has accelerated the industry by a decade, permanently altering the way entrepreneurs start, run, and grow businesses, as well as how consumers choose to shop and pay. We’re on the brink of a new era of commerce.”
And just as important as the store front itself is the plug and play back office applications that lock together like Lego bricks to build a system that functions for that business, handling payments, delivery and onward orders. Gelato provides one of those bricks, delivering print where and when it’s needed. “As soon as the consumer visiting the online shop places an order, it needs to be produced and this is where we come into the picture,” says Müller-Hansen.
That means taking the order, working out where it should be produced, handling payments in a local currency and local taxes if necessary and supplying the order and print ready file to the press at the printer that has partnered with Gelato. Today there are around 100 printers are providing output for Gelato in 30 countries, amounting to a market covering 5 billion consumers who will receive their printed product two or three days after placing the order.
“An entrepreneur can start selling to billions of consumers without having to invest in any equipment nor having to develop technology. Thanks to Gelato, they become the world’s largest printer overnight,” he says. “The strategy has always been about using software to connect to the printers’ assets and so create whatever the entrepreneurs want to create and transact over Gelato to produce, ship and pay for it locally.”
This has happened with a Dutch start up YourFilmPoster. The proposition is that it allows visitors to the website to create a personalised film poster, selecting a generic style for a horror movie, romcom, melodrama, comedy and so on. Images are uploaded and the names of directors and stars become those which that an individual customer chooses. Then click to order the print, to pay and the order becomes a poster printed on decent paper delivered from a local print provider rather than a central printer that YourFilmPoster has had to set up, manage and pay.
The simplicity is a key part of the appeal. Another customer is a Swedish company that enables consumers to create printed maps as wall art, choosing from modern or historic styles, different presentations and sizes, even maps of the night sky as well as well known earth bound locations. The sheer variety of colours and locations would be impossible to cope with without digital printing or an endless warehouse.
“Mapiful used to print in Sweden and mail from there across the globe. They have switched to Gelato and cut the distribution distance by 3,445 km on average. Local production means a faster service for the customer, there are 67% fewer carbon emissions,” Müller-Hansen says.
“When a Maori group in New Zealand wanted to get their artwork out across the world they identified two companies that could help – Shopify and Gelato,” he adds.
English Cyclist is a site that sells posters and artwork related to sports cycling, including highly personalised maps of favourite routes downloaded from a customer’s Strava account as well as designs from the grand tours. And there are hundreds and thousands more.
Other entrepreneurs will want packaging, clothing, mobile phone cases, and more each with a personal connection to the buyer. They want to focus on developing their brand, not on arranging print contracts.
Subsequently interest has been running high, with Gelato receiving 50-100 companies wanting to connect via the Gelato API each day. “We are aiming to double the size of the business from $75 million to $150 million with the next year.”
The network has expanded to include 100 print partners of different types. It will need to grow again as the product range develops and as the network of customers grows. Bringing on new print providers ought not to be difficult.
This is possible through the API, the cloud based technology that plugs into the Shopify or other platform at one end and into the press at the other, making rapid and painless integrations possible. Gelato released its API in the middle of last year with the Shopify and Etsy connections. It is about openness of digital connectivity.
The lightbulb moment, says Müller-Hansen, had arrived in 2012 when “I read a blog written by someone who had left Amazon to join Google and who described how Amazon used APIs inside its own business,” he adds. It led Amazon to introduce Amazon Web Services and provoked a discussion inside the Norwegian business resulting in the decision to adopt the API strategy.
“We did not come into 2020 to see what was happening and to realise that we needed an API. The API is being launched now, but it has been eight years in the making.” It was not easy. “We believed originally it would take three years,” he says.
Five years ago Gelato might have been too far ahead of the wave. Now the timing appears to be perfect. Müller-Hansen identifies two trends behind this. First is the growth in the performance and capabilities of the latest generation of digital presses. When Gelato first started it required production partners to use HP Indigo presses and to prove each day that these had been calibrated to ensure a consistent output, submitting colour measurements to the head office. That sort of technology is available on a much wider range of machines, including Konica Minolta, Canon, Ricoh, Kodak, Xerox as well as HP Indigo. All are keen to work with Gelato, he says. “We can make use of all the print technology that has been developed over the last 13-14 years,” he says.
And the formats that digital print is capable of have increased as well as the range of substrates that can be printed. “Print is not dying,” says the CEO. “In the digital printing sector, this cannot be further from the truth. People want personalised print, whether wallpaper, photo products, textiles and others that can now be enabled at relatively low cost and the print equipment vendors have been releasing amazing new capabilities.”
The second trend is that growth of e-commerce “with enormous implications for the printing industry”. In May last year online sales accounted for around one third of all retail in the UK and still amounted to 28% in July when lockdown restrictions had eased. Casualties on the UK high street have followed, among them stationery and cards retailer Paperchase, making it inconceivable that retail will return to its 2019 position. Etsy, the online market place for artisan producers and small merchants, has reported 10 million new buyers and 5 million reactivated buyers during the pandemic.
In many instances the new generation of micro businesses will need print and have little if any experience of specifying print and less interest in doing so. Gelato is there to handle that aspect of the process, what Shopify calls a headless architecture where back end technology is separated from the content part of their website and is a fully integrated automated backend operation delivering invisible automation.
For the print partners, and the technology providers, Gelato opens access to these businesses using these platforms. “Print partners receive orders that they can’t otherwise get their hands on,” says Müller-Hansen. He says that technology providers have been open to the idea of connection via API to their presses to automate set up and the workflows needed to handle micro orders.
The print partners need to be companies that “have invested in digital print capacity and who love to manage micro orders, who believe that custom products created by individuals will be the future of the industry”. The companies need to adhere to Gelato’s standards on the sustainability, on governance and on social standards.
This is a world away from printers working for print management where cost is all too frequently the differentiating factor, or from websites that collect the orders and send them out to the cheapest print provider. This is not about commodity print.
The importance of producing daily calibration sheets and submitting the results has lessened partly because digital press technology and colour consistency has improved and partly because the new type of work does not the sort of colour fidelity that brands require. A slight shift in colour on a one-off poster of a map is not going to be of crucial importance to someone buying it to hang in his home or office.
“The quality of output has improved vastly compared to five or ten years ago, so we are less concerned about print quality than we are about making sure that the job is delivered on time,” Müller-Hansen says. This is monitored both by Gelato and through online reviews. “Customer feedback is the truth serum,” he adds.
What is important is that the printer meets those turnaround times and standards for presentation and on management. The selection process looks for this capability. That means how a printer organises his business, the levels of staff support, including training, and the facilities it operates from. The new breed of entrepreneurs and their customers want to work with the most ethical businesses they can: it is part of their sales pitch. English Cycling for example pledges to offset 110% of the carbon produced in using offsetting schemes, including tree planting.
“A business that approaches us to join the network needs the software and workflows to handle micro orders and to be able to do that cost effectively and profitably,” he says.
“It’s no longer about simply colour quality and consistency – that is a notion that has evolved in the past. The partners that we carefully select in the first place have the experience and are operating in a professional manner. It’s a much more interesting discussion to talk about growth prospects than it is to spend time trying to achieve the perfect colour combination when quality from digital printing has risen year by year and month by month since I started this company..”
There is a six-week training programme to onboard a partner, something that will control the numbers that join the network. In the last couple of years it has added print sites in Sao Paolo, Toronto and Paris to increase the population that is within scope of the business. The company takes care of distribution partners, taxes and local currency payments.
Currently Gelato covers simple products, the posters being typical fare. This will increase in the same way that the more commoditised online print businesses have expanded their product ranges from flyers and business cards to multi section brochures and perfect bound books. Gelato has this year added printing on apparel, Tshirts and hoodies in the first instance, and is examining how to include books. “Then we can look at home decor and 3D printing. It is using the same platform the same network. The demand for customised print products is on the verge of massive growth, part of the trend away from mass production in print.
“And the trend goes beyond this industry. I do not see anything happening in any industry in any part of the world that is counter to these trends.” It is not about the new print entirely replacing the old style of printing.
He explains: “I do not believe this is a zero sum game, where one type of print has to replace another. All the growth is ahead of us, powered by digitisation.
“This is the most exciting growth prospects that digital print has ever struck before. We are turning the printing industry into an ecommerce industry and that’s where the excitement begins. Print has moved beyond the printing industry.”
