by Luke Goldberg, Senior Vice President, MSE Global
The title to this article was sung by great American poet, rock star, and voluminous drug user Jim Morrison. These words encapsulate many of the sentiments circling our industry like vultures hovering until the body is cold.
Many see the future wrought with the same uncertainty as Jim Morrison did due to the economic malaise gripping the globe, causing drops in paper usage, printing, employment, and printer placements.
I don’t mean to be a contrarian, but I just don’t see things as that grim. I see all of this negativity as a huge benefit to the aftermarket imaging supplies business. Let’s take a look at a couple of these negatives and what they really mean to the aftermarket business.
- OK, the economy stinks. We already know that this is good for our business and leads to new customers seeking price savings. This was proven in 2009, when the aftermarket increased share at the expense of the OEMs. Not surprisingly, the last time a recession hit the OEMs raised supplies prices to attempt to offset macro trends in printer placements and print volumes. We recently heard that as of January 2012, the same thing will happen! HP announced price increases ranging from 2 percent across the board on laser to up to 17 percent on older models, while Lexmark will increase prices from 3 to 7 percent on toner and ink (see “HP and Lexmark to Hike Prices on Supplies”). So, at the worst possible time for cash-strapped consumers and OEM dealers, HP and Lexmark decide to raise prices. All I can say is thank you! If the aftermarket takes just 1 percent more share because of these opportunities, we can grow collectively another $700 million as an industry. In addition, we also know that printer placements will slow down until the economy rebounds. We know that there is a direct relationship between market share and the age of the printer base. This also favors us, so stop complaining. It’s all good. Many would say, yes, but the customers we have already are printing less. I say, what about the 70 percent of customers you don’t have. Take advantage of these organic growth opportunities and grow your business.
- OEMs will continue to place pressure on the aftermarket via a multi-tiered approach including IP pressure, core collection, and new technology. I say, bring it! Both the legitimate aftermarket and the OEMs are on the same side regarding the majority of these litigations. We both have an interest in restoring fair competition. On the collection side, we need to educate consumers that if they send cores to the OEMs for destruction they are eliminating one of their purchase options—and a lower cost one, at that. Bring on the new technology as well. The OEMs’ technological innovations only benefit the aftermarket. Any new supplies innovation from the OEMs presents a new market opportunity and potentially new customers. New OEM technologies also represents an opportunity for aftermarket players to showcase their own engineering investment and technical expertise by bringing products to market quickly and differentiating themselves from the competition.
At the end of the day, the major trends are in the aftermarket’s favor. We can only hinder our growth if we continue to lower prices and compete for the same business we already have. At a time when the OEMs’ prices are increasing further, I expect the aftermarket to stabilize or even raise prices. If we keep our focus on capitalizing on these trends, we will do more than survive 2012; we will thrive.
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