It seems like absolutely nobody except your grandmother sends greeting cards anymore, which makes sense, because a text message is so much more immediate and (let’s be honest) way less hassle. So has the industry been weakened by lazy youth who don’t know how to lick an envelope, or write an address, or what corner you put the stamp on? Or is it somehow thriving? What’s the markup on cards, anyway? Alongside Carlos LLanso, CEO of Legacy Publishing Group and a former two-time president of the Greeting Card Association, we got some sincere answers.
So, do people still send cards anymore?
Yes, although there’s been a lot of bad news lately for the industry — one business closed its retail stores after its parent company filed for bankruptcy, and then a few days later, another announced it’s closing stores in 12 states. According to IBIS World, the industry is shrinking. But LLanso says that doesn’t square with what he’s seeing, or the data he has.
Since most greeting card companies are privately owned, it’s hard to get much financial data on them. But the U.S. Postal Service produces what’s known as the Household Diary every year, which outlines how much mail is being sent annually in different categories. LLanso says that the greeting card category is the only category going up, and has done so for the past three years. People, it seems, are sending cards!
Who the hell’s sending them?
Weirdly enough, LLanso says the market is being driven by millennials — however, probably less of a surprise is that they’re also changing the industry in terms of what sells. They’re buying less of the $2 cheapo cards and going for more of the embellished cards that cost way more: ones with letter-pressed work, embossing, glitter or better paper stock, and which happen to be far more expensive ($6 or more).
“When people tell me kids don’t send cards anymore, I take a deep breath and say, ‘When did kids ever send cards?’” LLanso says. “The first time I sent an actual greeting card was because my mother made me. Sending greeting cards isn’t a kid thing — it’s an adult thing.” He also points out that 40 percent of greeting cards aren’t sent at all — this includes the ones you hand directly to the recipient, or tuck into the gift wrapping.
Millennials aren’t being accused of actually killing an industry, for once?
No! They’re just sort of shifting the greeting card industry, not ruining it. LLanso explains that millennials are known for wanting authenticity, so the cards they’re buying are far wittier or more personalized than before. He cites a recent one he saw from an independent publisher that said, “Congratulations on your new boobs!” It’s not something you’d find at a more traditional card manufacturer, but it’s a very contemporary sentiment — something that can be given to a friend with a recent augmentation procedure, or perhaps someone who’s just gone through gender-reassignment surgery.
What about social media? Surely that’s helping kill off cards?
In LLanso’s personal opinion, social media actually helps his industry in a way, because it helps people remember birthdays. And in times of tragedy, when people post about a loved one passing away, those who learn about their friend’s loss are inclined to send a card; oftentimes they otherwise wouldn’t have found out about it. Same goes for any big announcements — pregnancies, engagements, graduations, new jobs, all that stuff that people always post about.
Is it a hard industry to get into?
Yes and no. The barriers to entry are pretty low, and there are thousands of independent publishers out there now — people making cards in their garages or bedrooms, or when they’re supposed to be working at their day job. It’s a top-heavy industry, with a few big players at the top and a lot of small fish. But there aren’t a lot of startup expenses. For example, it’s not like starting an electric car company, with enormous upfront costs.
The distribution side is a bit more complicated. Corporate grocery stores and pharmacies have contracts with the two major companies, so there’s a smaller point of entry for everyone else. But on the other hand, greeting cards are sold in tons of places: hardware stores, car washes, restaurants, bookstores, airports, gift shops of all kinds, often with locally made or themed cards. And one major trend is the increasing number of cards for sale in clothing and home goods stores. At specialty independent shops in particular, the proprietor might stock four different cards from 30 different publishers, giving a lot of card makers room.
How do those cards get into stores?
That part takes money — either going to the many greeting card trade shows, or paying a distributor to hawk your wares.
And what’s the profit margin like on greeting cards?
Pretty good! Let’s look at a cheapo, unembellished card that sells for $3. The publisher’s cost of goods for that card is about $0.20 and sells it to the retailer for $1.50. So far, so good! But there are other costs associated. If you’re using art that someone else created, royalty fees are 6 to 7 percent. Then the retailer gets a 20 percent commission on sales, and the card publisher typically pays for the display racks in the store as well (and pays the store to maintain the cards, sending the shopworn cards back for credit). The big retailers can often negotiate a discount, to where they don’t need to buy a $4.99 card for $2.50 — they can buy it for $1.99.
What about those fancy-schmancy cards that are $7 or more?
LLanso says the margins are about the same, but the materials and workmanship are appropriately more expensive. “I’m not an economist, but in the greeting card market, there isn’t a lot of price resistance that I’ve seen. I think it’s because the product has gotten nicer,” he explains.
The messages inside these cards always seem so comically sincere. What’s the industry really like to work in?
In a word: Chill. LLanso has been in this business for 16 years and says that 99.9 percent of people in it are really nice. “Think about it: why would you get into a business that creates and sells a product that’s all about saying thank you, I’m sorry or congratulations, and be an ass? I can count on one hand among the thousands of people in this industry that I don’t like. Most of them are gone already. They say, ‘Oh, these people are too nice!’”
I just need to ask this again, because it seems so counterintuitive: The greeting card industry is really being driven by millennials these days?
“Absolutely,” LLanso says. “There’s no doubt in my mind. You can’t build a business on 99-cent greeting cards anymore. That’s not to say that dollar stores don’t carry them, but what’s really driving the business is the higher-end, high-quality, authentic, smart, witty, funny greeting card.”
So as always, it’s the thought that counts — it’s just that the thought is getting nicer and more expensive.