by Richa Gupta | 01/12/2021

Loftware and NiceLabel announced on January 12th the combination of their two organizations and, with it, have significantly altered the landscape for labeling solutions. This makes Loftware (the name of the combined entity) the largest labeling solutions provider—by number of employees, revenues, and business reach, with a strong global footprint and expansive vertical market presence. VDC has been witness to the evolution of this market from static or siloed labeling applications to enterprise labeling solutions, more tightly integrated with key manufacturing, packaging, design and other enterprise applications. 

At the helm of this transition, Loftware has championed the Enterprise Labeling market, focusing its efforts on Tier I enterprise accounts across multiple industries with strict labeling requirements. The first to offer cloud-based labeling software to its customers, Loftware is a recognized category leader driving innovation and consistently reinvesting in its solutions portfolio. The 2018 acquisition of UK-based Gap Systems further expanded the company’s footprint, entering the B2B packaging artwork management market. Given how mission critical labeling is to the overall traceability and supply chain management dynamic, Loftware has nurtured relationships with enterprise application vendors; printer hardware vendors; and vertical-specific ISVs. Its go-to-market strategy is unique in the labeling community in that it sells direct while also leveraging its relationships in these communities to help get its foot in the door. With its “combination” with NiceLabel, Loftware further consolidates its position in the enterprise label software market, offering compelling synergies from a geographic footprint, target customer base and go to market model.

Source: Enterprise Barcode Labeling, 2020 VDC Research

VDC’s recently concluded Enterprise Labeling research has highlighted the importance of automating label data generation via enterprise application integration and cloud-based deployment models. We view both Loftware and NiceLabel as having similar business strategies despite their many differences—committed to building/fostering strategic relationships with enterprise application vendors such as Infor, Oracle and SAP; and taking a cloud-first approach to labeling solution deployment for its customers—Loftware via Spectrum (now in its 4th generation) and NiceLabel via Label Cloud. VDC believes this combined entity will transform how both these vendors conduct business today in an individual capacity and complement the other’s current focus.

That said, there are always questions. From VDC’s perspective, there are two very relevant questions that this combination poses—product consolidation and differentiation, and service delivery. First, there is a potential for confusion with all the product offerings across the two (firmly established) brands that may not be as differentiated. VDC expects to see some level of product line consolidation to ensure there’s no risk of any misunderstanding (both with partners and customers). We also believe this is an opportunity for (the combined) Loftware to extend its presence with NiceLabel’s enterprise customers as their end-to-end labeling solution of choice, across their globally distributed operations. Second, while NiceLabel relies on its reseller and partner network for much of its support and service offerings, Loftware has established a unique identity in this highly competitive market with its end-to-end in-house capabilities for software development and deployment, integration, support, and services. Given the company’s decision to project a fully integrated and unified front, what does this mean for its service and support strategies for the combined organization? Here, VDC expects Loftware to continue working with its direct customers (primarily large enterprises) and leverage its extensive channel relationships to service the SMB segment. The success of this two-pronged approach will hinge on Loftware’s ability to keep its channels of communication open and transparent across its customer and partner base. Loftware has stated unequivocally that it considers channel relationships to be a thriving and growing part of its business, and one it fully intends to nurture.

VDC maintains that the long-term outlook and growth prospects for Loftware look strong with this decision. Serialization requirements laid out by regulatory bodies under the Drug Supply Chain Security Act (DSCSA), Drug Quality & Security Act (DQSA), European Union Medical Device Regulation (EU MDR), and the Food Safety Modernization Act (FSMA), among others, affect all supply chain participants including manufacturers, packagers, distributors, and 3PL partners. Any mislabeling can have substantial financial implications on both manufacturers as well as their supplier network. A significant majority of our survey respondents believes serialization drives business intelligence for critical decision making, which is primarily made possible through print job automation. Our research shows that dynamic data for labels is the norm for packaging labels, restocking labels, and shipping labels, which necessitates automation in order to eliminate the possibility of introducing errors to the labeling process; survey respondents indicated the following are a significant drain on resources (due to labeling errors)—product recalls/stocking (34%) and waste generated due to rework and scrap (26%). The market continues to offer up opportunities as organizations (both big and small) look to lower labeling error incidence, if not eliminate it, and Loftware is now well-positioned to address requirements for businesses across revenue tiers, leveraging the clout and reach of both these established brands.

To learn more about VDC’s soon-to-be published Enterprise Barcode Labeling report, download the Executive Summary here.