It has been a while since we have heard anything new from LD Products’ Channel Partner Division about its Gold Line cartridges, a line of premium, new-build compatible toner cartridges aimed at copier dealers, managed print providers, and business-to-business office-supply resellers. That changed this week when the group announced an expansion of its Gold Line replacement cartridge warranty service to cover faulty cartridges from other third-party cartridge vendors. It is a bold move aimed at winning over dealers, highlighting the very low failure rate of Gold Line cartridges, and making the Gold Line’s warranty the industry’s “gold standard.”
What’s the Gold Line?
Readers who need a refresher on the Gold Line should start here; otherwise, click here to skip ahead.
LD Products launched its Gold Line of premium, new-build compatible toner cartridges and its Channel Partner Division in late 2017 (see “LD Products to Court Dealers and Resellers with New-Build Cartridges”). The goal was to win over dealers that may have been using only OEM and/or remanufactured toner cartridges to new-build compatible cartridges by offering them a reliable, quality product that costs more than the cartridges offered via LD’s retail business but offers significant cost savings compared to either OEM or remanufactured cartridges. LD asserted that the line uses the same quality components used in remanufactured cartridges, but because the Gold Line cartridges use a brand-new shell rather than an OEM empty that needs to be “cracked in half during production,” LD claimed that end users see less leaking and fewer performance issues than with remanufactured cartridges.
In 2018, the Channel Partner Division announced it had the industry’s lowest return rate for cartridges (see “LD Products Says Its Gold Line Has the Industry’s Lowest Return Rate”). In 2019, LD Products first announced that Buyers Laboratory, LLC (BLI) had tested its cartridges and found LD’s Gold Line cartridges produced good overall quality, operated reliably with no malfunctions, surpassed stated yield, and cost significantly less than OEM cartridges (see “LD Products Unveils BLI Test Results for Gold Line Cartridges” and “LD Products Offers Dealers Results of Buyers Lab Testing of Gold Line Cartridges”).
The last we had heard from LD Products about its Gold Line cartridges was in the early days of the COVID-19 pandemic, when the company issued a brief statement declaring that its warehouses were well stocked and its supply chain was in good shape (see “LD Products’ Channel Partner Division Issues COVID-19 Update”). Like many others, the Channel Partner Division also moved into selling personal protective equipment (PPE) in 2020 (see “LD Products’ Channel Partner Division Offers FDA-Authorized Medical Supplies to Dealers”).
We spoke with Christian Pepper, president of LD Products’ Channel Partner Division. He briefed us on what has happened with the Gold Line amid the pandemic. Our assumption was that LD Products, like most vendors targeting the office environment amid the pandemic, would have seen a drop in demand for Gold Line cartridges.
Mr. Pepper, however, asserted that the Channel Partner Division fared well compared to many vendors, although he allowed that it hasn’t been easy. “Like every company, we’ve had to learn how to work remotely, do more with less, and live with the business uncertainty and stress of the pandemic.”
Mr. Pepper said that over the last year or so the Channel Partner Division has been quiet in terms of new marketing efforts, but he declared, “Our sales and service teams have been working their socks off.”
Evidence of this is the group’s revenue growth. Mr. Pepper said that in 2020, which was a terrible year for so many, the Channel Partner Division’s revenue was up 50 percent. He explained that this was mostly due to the firm’s pivot into PPE. He admitted that the toner business was down 30 percent last year. The group’s toner business has bounced back in 2021, however. Mr. Pepper said that he expects the Channel Partner Division to deliver year-over-year revenue growth in 2021 and that is all due to toner as there will be “almost zero PPE revenue in our numbers.” He said the last couple of months have been particularly good. “I would say we have almost doubled our Gold Line revenue since 2019 now, and the last two months of August and September have been all time records for the amount of Gold Line cartridges sold.”
Mr. Pepper explained where the Gold Line’s growth is coming from. “We’ve won a lot of new dealers in the last year and increased our share in existing dealers because of our focus on exceptional product quality and service.”
Amid COVID-19, the industry has seen major issues with supply chains and logistics, including a chip shortage and delays and rising costs for global shipping (see “Third-Party Chipmakers Discuss Challenges Facing the Industry” and “Shipping Industry in Chaos Faces Choppy Seas Ahead”). Now, it seems, the supplies industry may be impacted by a new issue: electricity outages at Chinese factories (see “Will Power Cuts in China Impact Zhuhai’s Consumables Plants?”).
When asked how LD Products’ Channel Partner Division has been impacted by such challenges, Mr. Pepper said, “I believe we are doing better than average from the feedback we receive.” He claimed the Channel Partner Division has benefited from OEM supplies shortages and concern about OEM channel programs. “We’ve picked up a lot of business from OEMs like Kyocera, Xerox, and Samsung due to back-order issues and seen several HP dealers begin to get fed up with the Amplify program requirements and switch some business to us,” he stated.
Commenting specifically on the power cuts to Chinese factories, Mr. Pepper said LD Products has planned for supply-chain issues that last into 2022 and is “heavy on inventory.” He opined, “If U.S. vendors didn’t have the cashflow and/or foresight to place their normal orders now months ago, they’re going to have massive back-order issues in October, November, December, and beyond. Anything that isn’t already built and shipping now isn’t going to arrive and be cleared into the USA before 2022.”
Warranty Service for Other Vendors’ Cartridges
It sounds as if LD Products is well positioned amid tough market conditions. Clearly, the firm wants to win over new business, and it has an innovative way to do that. This week, LD Products Channel Partner Division announced it is extending its Gold Line replacement cartridge warranty service to cover faulty cartridges from other third-party vendors.
The cartridge warranty service is free and essentially enables dealers who have been disappointed with faulty cartridges from rival vendors to replace those cartridges with Gold Line cartridges at no cost. The hope is that dealers will be impressed enough with the quality of LD’s Gold Line that the Channel Partner Division will win their business.
The press release advises supplies dealers wishing to replace any vendor’s faulty toner cartridge with an award-winning Gold Line cartridge to simply contact the Channel Partner Division team, which will then replace the faulty cartridge for free. The announcement says, “To test drive the warranty service program and try a Gold Line cartridge for free, interested parties are encouraged to contact the Gold Line sales representative that manages their state.”
In the announcement, Mr. Pepper stated, “We have been listening to feedback from newly onboarded dealers and they keep telling us how unbelievably easy our warranty service is compared to our competitors. Therefore, we decided to extend that service to any dealer even if they don’t buy from us today. We invite anyone to put our service to the test and compare us to their current vendor the next time they need to replace a faulty cartridge. Our team will immediately ship out a new Gold Line cartridge for free, that same day. We never invoice for our replacement cartridges and Gold Line customers enjoy a lifetime guarantee on all of our cartridges.”
The press release included customer testimony about the Gold Line’s quality and service. Mike Guerin, vice president of field service at Ray Morgan Company, a Gold Line customer since 2019, said, “One of the major reasons we switched to Gold Line was because of the simplicity of their warranty management process. When we were with a different vendor, it was a lot more work for our purchasing staff to request a replacement cartridge and then follow their processes to return the faulty unit and obtain a credit. All of that was instantly eliminated when we started using the Gold Line and we haven’t looked back. In fact, since we began using the Gold Line, our overall return rate has been less than 0.1 percent which is comparable to OEM.”
A Unique Offer
The offer from LD Products’ Channel Partner Division struck us as a unique one—and a clever marketing strategy.
When asked if he was aware of any similar offers in the marketplace, Mr. Pepper says, “From what I understand, we are the only vendor that does not charge for warranty replacements. While other vendors invoice to replace faulty cartridges and only issue credits once a ‘faulty’ cartridge has been returned and evaluated, all Gold Line cartridge replacements are shipped free as part of our lifetime guarantee and hassle-free warranty management process.”
Mr. Pepper explained that what gave rise to a two-decade-plus status quo in which customers only get credits for faulty cartridges after their return and evaluation is that roughly half of cartridges returned are typically found not to be faulty at all. Instead, he said, customers are often experiencing “printer-related issues like the fuser, transfer roller, drum or some other component going bad.” Because it costs dealerships to send out a technician to diagnose a fault, a cheaper first step is to just order another cartridge and see if that fixes the issue. “Most aftermarket vendors’ real return rates are between 2 and 5 percent (despite the less than 1 percent numbers they all claim in their marketing), so the cost of shipping cartridges that are not faulty is significant and therefore they invoice for the replacements.”
Mr. Pepper explained that there are three reasons why LD Products is able to offer customers a better type of cartridge warranty. He said, “First, our really high product quality keeps returns down. Second, we collect all our the ‘faulty’ cartridges at our cost and autopsy them. We then formally share our findings with each dealer in monthly/quarterly business reviews. We use print samples and photos from the returned cartridges to show their service department what was wrong with the device, if it was not the cartridge. This allows them to be proactive in servicing these devices and that improves their customer service rates. Third, these processes create goodwill with the dealers so that when they get a future ‘cartridge issue’ they don’t just assume it’s a bad cartridge and they look a little closer to see if it’s a printer problem. Like the quote says from Ray Morgan Company, we have many dealers with return rates that rival those of OEMs.”
Mr. Pepper declared, “Across all our dealers, our Gold Line return rate is a real 0.85 percent and our defect rate—cartridges that really had a problem—is 0.51 percent. We’re able to demonstrate this in real time, and our dealers can get their quality performance data live from our Power BI dashboard at any time.”
We asked Mr. Pepper if there were any limits on the new offer to extend Gold Line cartridge warranty service to cover faulty cartridges from other third-party cartridge vendors. Call us cynical, but it seems it would be possible for some to take advantage of the offer, especially if they have bought a particularly bad batch of cheap cartridges. Mr. Pepper, however, isn’t worried.
He said, “I believe that most people are inherently good, especially dealers in the imaging channel, so I am not putting any constraints on the program. I don’t think anyone will try and take advantage of our goodwill. The cost of managing returns goes far beyond the hard and soft dollars in administering the process—dealers often lose end users for continuously sending out bad product, so I believe paying it forward and shipping free Gold Line cartridges to a dealer to help them fix a problem will quickly demonstrate that they could be working with a better vendor that will strengthen their customer relationships and underlying business value.”