Deal Radar 2010: JAM Paper & Envelope ,New York City

JAM Paper & Envelope is a niche retailer that has turned to the Web to expand its market for a much older communication technology – paper. From its New York City stores and warehouses on both U.S. Coasts and in China, the company ships envelopes, paper, cards, card stock, wrapping paper, gift bags, paper clips, folders, ribbons and other products around the world.

The current CEO is Michael Jacobs, who works with his son Andrew, the company’s vice president. JAM started as Hudson Envelope Corp, a wholesaler and printer of white envelopes that was founded by Michael Jacobs’s father-in-law. About 25 years ago, the company started making color envelopes, which at the time did not exist. They proved popular enough to start selling retail, and two JAM Paper & Envelope retail stores were opened. But the business has a strong online component, and sells through its website and through Amazon, with no minimum order.

JAM specializes in carrying and selling packaging products that one cannot find anywhere else. “We have no interest in competing with Staples. We want to get the business that’s too specialized for Staples. We want the niche markets that Staples ignores because the market isn’t big enough for them,” says Andrew Jacobs. For example, JAM will carry an entire line of burgundy envelopes and stationery because there are a few companies out there with a burgundy logo they are looking to match, or perhaps burgundy will become the color of the season for fashion designers and JAM will have everything in stock before anyone else. The company’s ideal product is one that some people are looking for and no one else carries.

JAM has dozens of products, each with its own market size, and operates in a highly fragmented market. The 2008 U.S. stationery market was $21.9 billion. It grew at a CAGR of 3.02% from 2004 to 2008 but then took a hit during the recession. The top target segment is the corporate marketing executive, PR executive, or event planner. According to the 2010–2011 Occupational Outlook Handbook, there were 56,000 people in meeting and conference planning (which includes event planners) in 2008, with growth expected to be faster than average. There were also about 56,000 public relations managers and just over 175,000 marketing managers, with average growth expected for this market.

Andrew Jacobs says that the main competitors are Kate’s Paperie, a New York City-based retailer of high-end stationery, paper, and gift wrap, and The Container Store, which has storage and filing products. Crane & Co., which makes high-end personalized stationary and the paper on which U.S. currency is printed, is a manufacturer and retailer that has also turned to online sales. JAM’s position is that its more barebones operations, even in its retail stores, enable it to offer better prices than many competitors.

At present, JAM Paper has 66,000 registered customers. According to compete.com, there were just under 11,000 unique visitors in March. The company had revenues of around $10 million two years ago and closer to $7.5 million last year since corporate spending decreased. But Andrew Jacobs says that in February, spending started to increase slowly and that April was a good month. Companies are starting to place orders for products that they received quotes on up to six months ago. Funds are beginning to be released that everyone says were held up due to the poor economy. All of JAM’s growth has been organic, and the company has no plans to raise any money.

Andrew says that “exit is not an option. We are entrepreneurs – personally, I’m a third-generation entrepreneur. And we are not serial company entrepreneurs. We are serial product entrepreneurs. If one product isn’t selling, then we will find one that does and expand on it.” The Jacobs family plans to continue to grow their business by keeping an eye on the latest trends and continually offering new products.

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This segment is a part in the series : Deal Radar 2010