Monday, September 8, 2008

MFP Wars "Death of the Independent Dealer"

The Copier business was once a wonderful business, where the manufacturers only sold their goods through Authorized Dealers. We had competition, however it was healthy because everyone was on the same playing field. The Dealers who sold the most got the best pricing, and the Dealers who sold the lease just had to grin and bear and that's the way it was.

Over time, the business model matured and companies like Danka, and Alco (Ikon) emerged to buy some of the largest or most profitable dealerships in the nation. At one time Alco (Ikon) was a distributor for Sharp copiers, and then one day Alco (Ikon) dropped Sharp and the Japanese Manufacturers shook in their boots. From what I remember, and I could be wrong, Sharp lost about 80% of their North America distribution in one day. Every since then the Japanese manufacturers have been buying dealers to preserve market share.

Which brings me to a line in Tommy Boy:

Tommy: [after watching Ray Zalinski car commercial] Hmmm. He seems like a nice guy.

Richard Hayden: This is the guy trying to buy the company, not to mention put you out on the street, and all you can say is,[sarcastically]

Richard Hayden: "Hmmm, he seems like a nice guy!"

While we sleep manufacturers seem act like nice guys and continue to buy the channel and under cut our pricing. we too could soon be out on the street!

Take a look at Canon, they stand to lose almost 600 million or more in sales in North America! What are they going to do? In talking to friends the last few days, they are courting dealers in droves to become a Canon Dealer, and if that doesn't work look for Canon to start acquiring dealerships in markets where there is no representation from Canon Business Solutions.

Word on the street is that every dealership is now worth more just because of the Ricoh purchase of IKON.

Copier manufacturers along with print manufacturers make money by putting ink on paper, and at this point in time it seems they don't care what they have to do to protect their channel. Just recently, I ran across a deal from RBS in NJ for a Print4Pay account, where RBS was losing 45,000 dollars in order to get the clicks! Am I missing something here??? RBS guaranteed single clicks for 11x17 at .06 and .0042 for 11x17. Hey, guarantees are for sissies right.

In the months ahead there will be many dealers bought thus further eroding the dealer channel. Before you know it, well it's tough to compete now, it's gonna get a lot tougher down the road.

Personally, I can't see how the small dealers can stay in business, mergers of smaller dealerships will be the next fad, thus enabling these companies to be bought by the likes of Canon, TABS, Global, etc....

Maybe Canon will buy HP? The more I think of it, we may see an agreement from Canon and HP to market each others products. Anyway you slice it, it seems the writing is on the wall for Dealerships!

-=Good Selling=-


Greg Walters said...

good post -

and right on...but...

Canon to buy HP? Oh my goodness!

or cross-marketing...yes...very interesting...

Jeremy said...

Great post! The indies that survive this latest market change (we sell Ricoh and we have both RBS and IKON within a mile of us) are really going to have to be innovators. If we don't decide to differentiate on service and professional services, we will never be competitive enough to survive and will be absorbed into one of these or another manufacturers' direct operation.