Sunday, February 5, 2012
The Death of The Direct Copier Channel?
To make this short and sweet, cause I've got to get my emails out, a quote (WTF, a quote on a Sunday, yup that's when I do my best thinking), and watch the BIG GIANTS game.
In recent years dealers have seen the direct channel sell hardware (copiers) and service at costs that the dealer can't match due to the fact that we're not in business to lose money. Plus you then read prognostications that most if not all of the Japanese copier manufacturers will NOT turn a profit this year, and most may post losses for 2011 fiscal year. It's bad, and most manufacturers will blame the economy, the Tsunami, the earthquake, the damaged nuclear plants and the floods in Thailand. Dare they not mention that their Direct Branches are losing money hand over fist because they don't know how to manage their business!
So, this week I heard from a Print4Pay Hotel member just got word that RJ Young announced yesterday that they have acquired the Columbus, Tupelo, & Bilox MS and Huntsville AL locations of Ricoh/Ikon. 6000+ MIF (machines in field). This is awesome and it's about time manufacturers may be thinking about selling off their MIF portfolio to dealers (as long as the manufacturer has a caveat that the dealer will not sell out to a competitive manufacturer).
The other day we had a discussion in the office and one of the reps asked how the direct branch can sell so low. I explained there are a few reason why;
1. They buy or sell more thus they can get the lowest possible price.
2. It seems there is no pressure from Japan to make a profit (just my thoughts)
3. They have a quota and don't have enough experienced sales people thus have to have the lowest price to capture business
4. The Dealer community profits subsidizes the losses from the Direct Channel losses
I'm big on number 1 & 4. If manufacturers truly wanted to turn around their operations maybe now is the time to start selling their MIF to their brightest and best dealers. Dealers in turn will need to ramp operations and higher those employees that are laid off from Direct (and only the strong will survive), within six months they will be driving more profit to the manufacturer and the losses will stop. Dealers will then be able to sell the value of the brand name, the support, the solutions and their knowledge.
That's it off to watch the game! Comments would love to hear them.