*NEWS*STAPLES DUMPS OWN-LABEL TONERS/INKS

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*NEWS*STAPLES DUMPS OWN-LABEL TONERS/INKS

 user 2007-02-07 at 10:43:00 am Views: 66
  • #17783

    Staples dumps own-label print supplies
    Big box secretly ushers in new era of cooperation as it agrees not to stock HP-compatible printer consumables.
    Despite
    a lengthy series of emphatic denials, Staples has taken the plunge and
    dumped a significant line of its own-branded imaging supplies. With no
    official announcement, the big-box giant has quietly dropped
    Staples-branded compatible cartridges for Hewlett-Packard (HP) and
    Epson printers from its retail catalogues. Sources report that removing
    HP and Epson cartridges from the Framingham, MA-based office
    superstore’s catalogue is the first step in what may amount to
    significant changes in the Staples line of aftermarket printer
    consumables. Staples is expected to remove all its Staples-branded HP
    ink and toner cartridges from retail stores early in the first quarter
    of 2007, and there are strong indications the same move is being
    planned for Staples-branded Epson compatibles. The suppliers for
    Staples’ own-brand products have had their contracts rescinded and
    commentators are describing the switch as a victory for the OEMs. The
    settlement Epson recently reached with various aftermarket companies is
    probably behind the office superstore’s decision to drop its Epson
    compatibles.Last month, a number of companies that market Epson
    compatibles announced that they would immediately discontinue selling
    these cartridges. The companies included the French firm Armor, which
    had supplied Staples with its branded Epson compatibles. Staples’
    decision to stop selling certain non-OEM cartridges is being seen by
    commentators as a victory for printer makers in their battle for market
    share with third-party supplies vendors. With over 1,500 stores in
    North America, Staples’ move will affect the sales of tens of millions
    of dollars worth of ink and toner cartridges and will undoubtedly have
    significant knock-on results for OEMs and third-party imaging supplies
    vendors alike. The move will also severely dent the company’s
    aspirations to develop their own-brand business into their targeted $3
    billion-a-year revenue earner. Imaging industry expert Jim Forrest, who
    is also senior analyst at Lyra Research, told OPI: “The suppliers of
    Staples brand remanufactured inkjet and toner have been ‘relieved’ of
    their contracts. They told InkCycle, who were the suppliers of their
    remanufactured ink, and Clover and GCCI, who were the suppliers of the
    toner, that they were no longer needed. “At the end of December,
    Staples published their US retail Winter 2007 catalogue and there are
    no Staples brand remanufactured cartridges – in fact, there are no HP
    remanufactured ink cartridges of any kind. “There are also no
    Epson-compatible remanufactured cartridges featured in the new retail
    catalogue, but I think that has more to do with the pending lawsuits
    and is not connected with the HP agreement. “It’s obviously been a
    long-time coming because the catalogues have to be printed well in
    advance. However, they’re all still present in the contract stationer
    catalogue but I suppose they have to get clear of their existing
    inventory. “We believe there have been some serious behind-the-scenes
    negotiations. HP does a lot of business with Staples; we don’t know the
    exact figures, but it’s a lot.” Forrest said he believed the landmark
    decision was based on simple maths.He added: “Let’s say, for example,
    all of HP’s business through Staples – all of the computers, the
    printers, scanners and the rest of the hardware as well as all of the
    consumables, such as the paper – if we pick a random, round number for
    the value of that business, let’s say $2 billion. “Staples have an
    annual turnover of about $18 billion. Everybody knows companies like HP
    give their retailers discounts, rebates and market development funds
    (MDF), which usually amounts to about two percent. “What do you think
    would happen if HP went to Staples and said ‘we will give you five
    percent if you discontinue your own brand of remanufactured
    cartridges’? That means they will get three percent more on $2 billion,
    which is worth about $60 million. “We think that Staples records
    roughly $120 million a year with the Staples brand HP-compatible ink
    and toner cartridges and they make about 30 margin points, which means
    they make roughly $45 million in profit. “You can imagine the
    discussion in the boardroom. They can make about $45 million selling
    these things and run the risk of the legal implications and return
    problems or take the $60 million and sleep soundly at night.” When
    asked what the Staples decision meant for the other big boxes, Forrest
    said: “I’ve got to believe that HP are talking to them as well to try
    to create a similar sort of deal. But now the likes of Office Depot and
    OfficeMax will be thinking how many customers they can pick up who are
    remanufactured cartridge fans who were buying Staples’ own-brand
    consumables. “This is the first time I can recall that one of the big
    boxes has yielded to pressure from one of the manufacturers.”