Did you hear the one about the customer who said, “Just give me the specific product I want; I’ll pay any price”? Maybe the one about the customer who said, “I want the cheapest possible product, and I don’t care at all about the quality of my prints”? Or how about the reseller who said, “Profit margins don’t matter; I just want to get my customers the products they need”?
You get the idea.
In the imaging industry, we have always lived in the middle of the cost/value equation, trying to give the end user the best of both worlds while also creating the ideal selling situation for dealers. And the truth is, it has never been easy, even when print was in its prime.
Customers want products that are inexpensive and reliable, and resellers want to be able to make a good profit. Unfortunately, that became even more difficult over the years as we moved from obstacle to obstacle — aftermarket bias, decreasing margins, IP infringing clones, and changes in authorized dealer models to name a few. Overcoming these obstacles would go a long way toward creating a winning proposition for dealers and customers.
Let’s think about that last issue. Over the last couple of years, OEMs deauthorized more than 20,000 resellers. Those who remain are subject to stringent operating guidelines that affect both dealer choice and margins. Dealers who carry multiple lines may find themselves skewing in other directions where possible. This can be a prime opportunity for aftermarket conversion.
Overcoming aftermarket bias is the first step, and clearly, a key to this is a partner that can provide both high-quality product and the sales tools to back it up. Customized marketing materials, presentations, videos, and even joint sales calls that educate the customer about third-party supplies go a long way toward educating, and eventually converting, customers.
Then, there is the cost savings available to customers as well as dealers. Let’s look at some basic math for this one. As an example, we’ll use the HP 504A series of color cartridges, used in the HP CM3525 and CM3530 series of 30-ppm color laser devices — a hot segment that has grown more than 785 percent annually according to IDC. A full set of the OEM cartridges costs $762 and sells for $892 — a total gross profit of $131.
If we look at aftermarket pricing, the numbers change significantly. A full set of quality, leading-brand remanufactured cartridges costs $306 and sells for $623. That is a total gross profit of $317, and savings for the customer of almost $300 as well — more than 30 percent.
It is already a win-win, but what if there were additional incentives for the dealer who sells those products — up to 10 percent over and above current rebate programs? It becomes hard to argue with that kind of logic.
Selling on price alone, of course, has never been a good idea, but it is always going to be a factor for businesses, for whom controlling expenses, reducing costs, and improving the bottom line are at the top of the list of business challenges. These trends are affecting traditional paper-based business processes and altering the way office printing equipment is used, making it essential for dealers and managed print services (MPS) providers to focus on the cost of print.
The key to the equation is focusing on your customers’ needs first and then identifying what product and brands are right for your dealership based on your research. For some customers, the OEM product may continue to be the best option. For others, the time might be right for conversion to a less-expensive, high-quality alternative such as MSE brand cartridges. In addition, there is another group — future customers who may be looking for an alternative to their current product and are ready for a change.
Is the time ever right for OEM conversion? Many factors have fluctuated through the years, with the economy, prevailing legal environment, and market conditions all playing roles. But given the recent upheaval in dealer models, consolidation in the market, and changes in overall printing volumes, now may well be the perfect time to take advantage of the price, quality, and marketing expertise offered by solid partners in the market, and see about tilting the balance in your favor.