When I presented pricing for the MPC4000, they cringed, cried and carried on about the price. So, I moved downward with machines since their volume would not warrant the MPC4000 anyway (btw, they were told by a friend to get the MPC4000). Finally we settled on the MPC2800 and I guess they also figured this was too much for them to spend so they decided to shop.
Hey, I got no problem with shopping. However, they decided to call other Ricoh suppliers for a price on the MPC2800. Yeah, I figure Ricoh Americas Corp aka Ricoh Direct and at least another dealer of Ricoh or Savin would get involved.
Too my surprise when I was trying to find out who else was in the mix, indeed it was Ricoh Americas Corp aka Ricoh Direct (as the rep states), but it took me a few minutes to get the other supplier. Well, it was.......IKON! I then told the potential customer that Ricoh owns Ikon, they are merging and if you did not like one of them, and then picked one of them over us, you would eventually being doing business with the one you didn't like or care for.
So, the take on this can be Ricoh Direct vs Ricoh Direct, who will win? I'm hoping I can get the deal, however I'm rating it very slim since either one of these "Direct" branches are just buying business and giving clicks away as represented by a quote that was emailed to me from a customer in Sacremento, Ca. This quote feature two Ricoh C550EX with a mixed color volume of 10,000 per month and a cost per page plan at .04 cents!!!
Anyway, I'm hoping one day someone with some smarts at Ricoh may read this and the light will come on with what's happening in the field and they'll realize they can't keep this up, well they probably can, however they'll lost most of their dealers and since dealers are subsidizing the Direct Branches, it would only be a matter of time before Ricoh gets bought by the likes of Canon, KonicaMinolta or how sweet would it be to have Kyocera buy them.
-=Good Selling=-
--What now? The direct manufacturer's have lost valuable service revenue streams to the dealer community, and they're scared. How do they get these revenue streams back? They start going back to the SMB accounts that have left them for the dealer community, and now they are going to buy them back by slashing their MPS margins.
ReplyDelete--In response, the dealer community reduces margins, because they have to keep these customers they tried so hard to take away from the manufacturer's, & in doing so their margins are cut.
The gist of that diatribe is this: if all involved continue to slash hardware margins & service margins and are counting on MPS to save them, they will be in the same position a few years from now. All-in-all, chasing pages will become a futile exercise. But, if you own the network, you own the printer & mfp business.
Once you own these aspects, you shore up the document process infrastructure, and you are irreplaceable. You own the account. At least until the next big thing.
A few days ago, I was speaking with one of my co-workers about the ridiculous deals that all of the direct branches & some low-cost providers in the area have been making over the past several years when I started to wonder what caused all of this.
ReplyDeleteI came up with this theory: Before Xerox's acquisition of Global Imaging 3 years ago, there were some providers that would sell hardware at deep discounts and possibly even reduce service if an account was a certain size. Otherwise, the consensus was always to "Keep service whole." And, every dealer followed the "Johnson model" (Global CEO) for a target profit margin of 14%.
When Global was acquired by Xerox, it set into motion a chain of events:
--Ricoh & Canon immediately drop the dealer licenses for all GIS-owned companies and started throwing promotional dollars at dealers with the goal of helping them upgrade GIS customers to a new system before Xerox started eating away at their market share. In turn, Xerox's GIS channel fights back by reducing their pricing so that they do not start to lose customers that they just acquired.
--In order to keep up with Xerox, give Canon the finger, and increase their distribution, Ricoh comes in and acquires IKON. As a result, Canon starts throwing money at their distributors to keep their Canon customers with the brand before Ricoh gets to them. In turn, IKON/Ricoh reduces their pricing to keep from losing the customers they just acquired to Canon distributors.
--As Xerox made their acquisition, the housing market is collapsing, causing dealers & branches alike to try harder to maintain market-share while their Real Estate & Mortgage clients are barely treading water. To maintain the amount they must purchase from the manufacturer's they start selling volume at reduced costs instead of walking away from transactions that are overly-aggressive on price.
--As Ricoh makes their acquisition, the economy is in the midst of the worst downturn since The Great Depression, once again placing pressure on every distributor to fight harder for every sale, which often means reducing profit margin. Additionally, buyers are forced to press for lower pricing due to their lack of cash flow.
--Before you know it, most dealers and branches alike are resolved to the fact that we are selling a mature, commoditized product, and they start to fight each other in every transaction until most buyers know that someone will give them the lowest pricing possible if they let enough dogs into the fight.
--Enter the savior: Managed Print Services. As companies are beaten up by the recession, everyone is looking to save a dollar, & we can help them uncover hidden costs and extend the life of their valuable assets, all while making their company more efficient as they're forced to do more with less. We are no longer chasing down low-margin hardware transactions. We are trying to sell a service that requires little or no hardware acquisition. All analysis free of charge.
--Let's crank up the flux capacitor and look forward 5 years: if you haven't transitioned into being an MPS provider, you are 6 feet under. It appears that the playing field has been leveled, and the dealers are even more so the most profitable distribution channel, & the manufacturer's start to lose market share as the "Trojan horse" opens its doors and starts replacing assets that need to be retired.