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Comment ~ Issue 249 (2 September 2013)

Comment ~ Issue 249 (2 September 2013)

September 2, 2013

What price an ink cartridge?

John Ogden. Credit Lytham St Annes Express and Rob Lock

John Ogden. Credit Lytham St Annes Express and Rob Lock

When I first read the story about a shopper paying almost double for an HP inkjet cartridge, I immediately got on my high horse, and was going to castigate the store. But then I had a cup of tea and reflected on the matter, and decided to visit one of the WH Smith stores to see for myself.

The store I visited had a very good range of OEM cartridges on display and all priced rather higher than you would expect to pay. But then the rest of the display area is for aftermarket cartridges, all sensibly priced at about the same as an OEM cartridge.

I had a word with the store manager, who told me that he sells three aftermarket cartridges to every OEM cartridge, but whatever cartridges the store sells, they make a good margin on. From his experience,  the customers trust their brand, and they have not had any quality issues. Now if we can persuade all other vendors to follow suit, wouldn’t we be as happy as the remanufacturers that supply WH Smith!

Remanufacturing is the winner

DCI has given up the long fight with Epson and decided to only remanufacture Epson ink cartridges: a real about-face for DCI, and a hollow victory for Epson. Why hollow? Well consumers want lower priced consumables, and that is why the Epson compatible became such a strong product in the market, with 60 percent market share in some markets.

The Epson business model is to sell cheap printers and expensive consumables. A well-established sales model, except for the fact that someone who buys the very cheapest printer also wants the very cheapest consumable: ergo, the aftermarket.

dcijettecfactoryAll Epson have achieved is to stop DCI making compatibles. Some of that business will inevitably migrate to other compatible manufacturers, and some of that business will be replaced with remanufactured product, and some, but not much, will be replaced with OEM product. The customer base of a company like DCI is huge, and converting even half of them to remanufactured product will stimulate an increased demand for remanufactured Epson cartridges. In the end, the consumer wins and remanufacturing wins.

If Epson are to continue to sell cheap printers and expensive consumables, then they really need to look at increasing their revenue – not through litigation, but through licensing. Better to earn a euro per remanufactured or compatible…

Lower VAT

India has reduced the rate of VAT from 14 percent to five percent on cartridges. Good news for everyone. The challenge is: will the reduction lead to increased sales, or profit taking in the channel?

Japan can’t get enough

Remanufacturing is big in Japan, and remanufacturers are having some real problems with the Canon collection programme. Apparently, the Canon empty collection programme is so successful that, at times, there is a lack of empties on the market in Japan, and is prompting some remanufacturers to look wider afield to source empties.

Rumours

In politics, August is the silly season for stories, because the politicians go on holiday and the press are scrabbling around for stories. Our dilemma is the opposite. We have three stories – or rumours – and are struggling to make contact with the right people, because they are all on holiday. Frustrating at first, but then I thought about it. If the politicians are on holiday, and the OEMs are on holiday – who is looking after the shop?

Anyway, for what it is worth, here are the rumours we are trying to follow up on:

  • Rumour One

Rumour one is that an OEM, allegedly Epson, has taken action against two German ecommerce sites. However, Epson does not comment on its legal actions (unless they perceive a win), and the two ecommerce sites won’t comment either.

  • Rumour Two

Rumour two is that an OEM, allegedly XXXXX, has changed its printer firmware so that it locks out certain clone cartridges. The firmware also locks out OEM cartridges and it forces the customer to contact the OEM to get a reset code. We understand that this firmware is only in use in one country at the moment, but we will keep you posted.

  • Rumour Three

Rumour three is that an OEM, allegedly HP, is going to be changing its inkjet printer firmware shortly. This may mean that some aftermarket chip solutions would change from not infringing to infringing HP’s intellectual property rights.

We will keep you updated on the veracity of the rumours.

250th Edition

On 30 September we will be publishing our 250th edition of The Recycler, and we would like to hear from anyone in the industry. Whether you were in business in 1991 or started later, we don’t mind. We just want to hear your story – how you came in to the industry, what you are doing now, and how you see the future.

Send your contribution to news@therecycler.com and put “250th edition” in the subject and we will do the rest. If you have pictures, all the better. Our deadline is 10 September for this special issue.

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