MARKET FOR EMPTY INKJET CTGS BOOMING !
MARKET FOR EMPTY INKJET CTGS BOOMING !
2005-05-23 at 12:37:00 pm #9805
Market for empty inkjet cartridges booming, schools cash in
David Wood makes a good living by asking people for their empties — empty
printer cartridges, that is.
To make his business pay, Mr. Wood does a lot of asking. Every three months
he visits about 345 schools and as many as 20 churches dotted across his home
state of North Carolina. He also phones about 15 schools a day, as well as
several Boy Scout and Girl Scout troops.
These schools, churches and other nonprofit groups comprise Mr. Wood’s
grass-roots army of collectors, helping him gather a total of about 9,400 empty
inkjet and laser cartridges a month. He pays an average of $2.50 for each inkjet
cartridge. Then, his Raleigh, N.C., business, called Kartridges for Kidz,
resells the empties for an average $5.50 apiece to remanufacturers who will
recondition them, refill them and offer them for sale at 30 percent to 50
percent less than new brand-name cartridges.
“I’m basically asking for other people’s trash, which is the beautiful thing
about this,” says Mr. Wood, whose business brings in monthly revenue of about
Mr. Wood is one in a growing cadre of cartridge brokers that helps nonprofit
groups raise funds, encourages recycling and supplies a network of mostly small
remanufacturers that offer consumers a lower-cost option for running their
printers. It is a win-win proposition in many respects, except for the big
printer makers such as Hewlett-Packard Co. and Lexmark International Inc.
Brokers like Mr. Wood and the remanufacturers they supply are pinching the
printer giants, which rely heavily on profits from repeat sales of new
cartridges. The printer companies also are beginning to feel a squeeze from
office-supply outlets that sell do-it-yourself refill kits and chains such as
Cartridge World and Island Ink-Jet, which are setting up across the nation as
cartridge-refilling stations for consumers.
In the past five years, the share of the global ink-jet-cartridge market held
by remanufactured cartridges has risen to 17 percent from– percent, says
imaging-industry tracker Lyra Research. Lyra expects that to rise to 24 percent
by 2008, even though Consumer Reports and other consumer watchdogs consider
remanufactured cartridges inferior in quality.
H-P and others have responded by suing some remanufacturers for patent
infringement or other alleged offenses. They also encourage consumers to return
used cartridges for recycling by packaging post-paid return envelopes with new
John Solomon, a vice president in H-P’s imaging division, says the company is
trying to help the environment, not thwart remanufacturers. “We welcome
competition,” he says. Mr. Solomon calls the cartridge collectors “a cottage
industry” and says that while H-P’s own cartridges are more expensive, they are
of better quality.
Remanufactured cartridges, which typically are identified as recycled or
compatible replacements for name brands, can be purchased online and are sold by
office-supply chains. On H-P’s Web site, a new black cartridge for the H-P p1000
Photosmart printer sells for $29.99, while a recycled cartridge for the same
printer sells for $21.73 on the Web site of remanufacturer Rhinotek Computer
Products Inc. H-P recently sued Rhinotek, alleging the remanufacturer’s
packaging misleads consumers into thinking its cartridges are new. Rhinotek has
said the lawsuit amounts to “bullying,” and that it intends to fight it.
Demand for empty cartridges — sometimes called “cores” — is skyrocketing. A
used black-ink cartridge for an inkjet printer can fetch an average of $5 from a
remanufacturer, up from $3 a year ago, according to Lyra. Research firm
InfoTrends/CAP Ventures expects Americans to go through 86.5 million laser-toner
cartridges and 604 million inkjet cartridges this year.
Cartridge brokers are mobilizing their collectors to hunt for these cores.
Only “virgin cores,” or cartridges that have been used just once, are considered
worthy of remanufacturing. Because good-quality cores aren’t easy to find,
brokers are often willing to pay handsomely — in some cases more than $20 for a
used laser-printer cartridge.
Schools and other nonprofit organizations welcome the extra money. “Since
September, we’ve brought in $1,100″ from pooling used printer cartridges, says
Pat Sherrard, a part-time teacher at Sts. Simon and Jude School in Louisville,
Ky. The funds go toward new equipment for the school’s computer lab, says Ms.
Sherrard, who collects about 50 used printer cartridges a month.
As competition for used cartridges intensifies, brokers are more aggressively
recruiting schools and other institutions. FundingFactory, owned by recycler
Environmental Reclamation Services Inc., Erie, Pa., has put together a
sophisticated system of points that participants can earn for empty cartridges.
The points can be redeemed for cash or goods from retail partners. Other brokers
are showing up at educational conferences to recruit new collectors or are
advertising in Parent Teacher Association newsletters.
Judy Quinn, a technology coordinator at the 1,860-student Massaponax High
School in Spotsylvania County, Va., says cartridge brokers fax her recruitment
letters every week. “It’s like spam faxing,” she says.
Some cartridge brokers even try to poach cartridge collectors from rivals.
Jill LaRose, founder of a shelter for teenage girls in Peoria, Ariz., used to
send her empty cartridges to a broker in Minnesota. Early last year, a broker in
nearby Phoenix persuaded her it would be easier to drop off empty cartridges
locally than to ship them out of state. So, Ms. LaRose switched loyalties. “It
just made more sense to go with someone local,” says Ms. LaRose, who stockpiles
about 100 used cartridges a month, for which she gets around $250.
Ink and toner remanufacturers say the brokers are vital to their trade.
Robert Dunn, owner of ink-cartridge remanufacturer Rolo Enterprises, Elmira,
N.Y., says he purchases 2,500 empty cartridges a week from brokers and
frequently hoards whatever empties he can buy. On average, he says he pays $5.50
for a used ink cartridge today, up from $3 a few years ago. He says he sometimes
shells out $9 for hard-to-find empty cartridges. “Cartridge brokers are the
backbone of our industry,” Mr. Dunn says.
Mr. Wood, the 37-year-old proprietor of Kartridges for Kidz and a former
office-supplies salesman, got into the cartridge-collection business in 2002
after a friend mentioned he was getting paid for used cartridges. After
researching the trade on the Internet, Mr. Wood and a partner, former
administrative assistant Angie Magdalena, set up their business out of Mr.
Wood’s house. The duo designed a Web page, and Mr. Wood visited local schools to
hand out cartridge-collection buckets and price lists.
As the business got off the ground, Mr. Wood approached other groups, such as
churches, and college fraternities and sororities. He advertised in a magazine
aimed at PTAs. Word began to spread, and soon potential suppliers began
Today, Kartridges for Kidz has about 500 participating schools, nonprofit
groups and other cartridge suppliers. Mr. Wood rents five storage facilities,
where he receives the used cartridges, inspects them and packages them for
shipment to remanufacturers. He says he pays schools and others for their
empties within a few days of receiving them.
Kartridges for Kidz still is a relatively small player. Other brokers such as
TonerBuyer, a unit of Cartrx Corp., and FundingFactory say they collect more
than 200,000 empty cartridges a month. Mr. Wood believes there is plenty of
growth ahead. “There are printers everywhere, so people are always using
cartridges,” he says.