*GREAT NEWS* FOR THE INKJET CTGS IND. !
*GREAT NEWS* FOR THE INKJET CTGS IND. !
2003-08-04 at 12:00:00 pm #3537
Refilled Inkjet Cartridges Going Cheap
Sunday August 3, 8:26 am ET
NEW YORK- There’s gold in those empty inkjet printer cartridges.
A thriving new economy has grown from selling refilled or remanufactured cartridges for up to 80 percent less than manufacturers like Lexmark International (NYSE: LXK – News), Epson (Tokyo:6724.T – News), Canon (Tokyo:7751.T – News) and Hewlett-Packard (NYSE: HPQ – News) charge.
And, the big office-supply superstores, such as Staples (NasdaqNM: SPLS – News) and Office Depot (NYSE: ODP – News), have got into the act, collecting empties and shipping them to third parties for refilling and selling in their stores under their own labels.
The cash value of empty cartridges — a used Lexmark can fetch up to $7 — has spawned a vast recycling movement and the Internet is clogged with ads for companies offering refill kits or remanufactured cartridges for computer printing.
A Web site (http:/ http://www.tonernews.com) for buyers and sellers lists prices for the estimated one million empty ink cartridges thrown out daily around the world, mostly by individuals with home computers. Most cartridges can be refilled at least two or three times, or even as many as 10 times, according to experts.
In contrast, laser printers that use toner are used more by companies, which return empties directly to the manufacturers.
It may not be an ink war yet, but the big manufacturers have already felt small-arms fire from refill-merchants, who can operate out of their own kitchens.
Such is the value of empties that tales are told of armored vehicles delivering cartridges in Latin America. And, Office Depot has acknowledged that shop-lifting of ink cartridges ate into its second-quarter profits.
As a result, the big makers are trying to hit back with technology like “killer-chips” that can disable equipment, to keep consumers buying their higher-priced brand-name cartridges.
‘TAKING MARKET SHARE’
“They absolutely hate us. We are taking market share from them,” Mark Ansier, vice president of Toner Plus, an Austin, Texas-based remanufacturer, said of the big makers.
“They (cartridges) are a very valuable commodity, that’s why they are collected in all parts of the world and resold. In some parts of the world they are being stolen.”
“Buying and selling cartridges is a $100 million business at the moment,” said Ian Marzonie, president of Anzen Corp., which remanufactures and refills 100,000 cartridges a month at its 40,000-square-foot facility in Denver.
For example, his company, which operates the InkjetUSA.com Web site, offers the Hewlett-Packard 78 cartridge online for $20. The same name-brand item in a store retails for $53.
Lexmark, which warned last week it would miss third-quarter earnings estimates because of slowing demand for ink cartridges, downplayed the threat.
“The proportion of total sales of supplies that is taken by these refills is a real minority,” Chief Financial Officer Gary Morin recently told Reuters. “In many cases, it is actually a declining phenomenon. It has not been a successful foray.”
Not so, said Jim Forrest, of Lyra Research and managing editor of the Hard Copy Supplies Journal, a publication for the digital printing and imaging industry. He said refillers now control 15 percent of the market, and that is rising.
According to Lyra’s research, the total value of the inkjet business, including after-market and refill kits, is $21 billion. Forrest said 794 million ink cartridges were shipped worldwide last year, working out at 2.2 million per day, including refilled and “compatible” cartridges.
‘BOOMING MARKET FOR EMPTIES’
“There is a booming market for empties, they are worth money, up to $7 or $8 each,” he said. “Companies are prepared to pay lots of money for large quantities of clean empties.”
Staples plans to donate $1 for every cartridge recycled in its stores, with a goal to raise $5 million for public education. It said 80 percent of inkjet cartridges are thrown away.
“The customer is looking for value and we feel we offer a wider selection of remanufactured ink cartridges,” said David D’Angelo, Staples vice president for global sourcing.
He said remanufactured cartridges sold at 10 to 20 percent below the price of those made by branded-product makers. “We hope to gain more market share. This is a very competitive business.”
Forrest said the problem now is getting empties, because inkjet printers are used mainly by home users who get through maybe one, two or three a year and throw them in the trash.
Of the major inkjet printer makers, Lexmark has the lowest rate of remanufacture — 6.6 percent last year but rising to 7.9 percent in 2003, he said. Hewlett-Packard’s third-party remanufacture rate is expected to be 13.5 percent this year.
“Lexmark’s cartridges are the most difficult to fill,” said Forrest, “The inkjet design is extremely difficult, if not impossible, to clone because it includes so many patents and integrates the print-head to the ink tank.”
“We’re in a dogfight with the OEMs (original equipment manufacturers),” said Ansier.
It is an “absolute fallacy” that consumers might lose a warranty for using anything but an authorized cartridge, he added. “You can use any gas you want in a car.”