INDIA:HP TO OPEN 1,200 CARTRIDGE STORES

[Anonymous]

Global copanies to change price dynamics of cartridge market
Jan, 2008,MUMBAI: For long, printer cartridges were either the costly official variety or the cheap fake ones in the grey market. Now, a third option is available. The cartridge refill market is getting organised and global companies have entered India offering cheap and dependable cartridges. Industry experts say this trend is likely to change the pricing dynamics in the Rs 2,500-crore cartridge market.The entry of large global players promises to bequeath the largely unorganised segment with the stamp of legitimacy and customer acceptance. Late in 2007, Australia-based Cartridge World (CW) brought its franchisee business model to India. It has plans to open 30 outlets by end of this month. Just last December, another company, Cartridge Cafe, also announced that it would open 100 kiosks and stores to sell consumables to end customers.Their idea is to provide cartridges that will increasingly come closer to the original ones in quality, but at a price far lower than HP or Canon. “We are a fresh new alternative choice for the customer,” says Naveen Rakhecha, chief executive officer for South Asia at Cartridge World.

The global chain has plans for nearly 250 franchisee outlets by 2010, “We are eating heavily into the OEM pie in the market,” says Mr Rakhecha. But its not a walk in the park for a re-seller such as CW. “R&D for us is a continuous process, as the aim is to provide to the exact yield as the OEM products, without infringing on their patents for inks,” he says. CW is aggressively pushing for market share with money-back guarantee et al.With printer prices falling, manufacturers such as HP and Epson make money on cartridge sales, which is a repeat market. But as organised competition eats into those margins, the companies are innovating. There is talk of fitting a chip in cartridges so that unofficial refilling won’t work. But it remains to be seen whether the market will accept that.

HP plans a huge marketing campaign suggesting that its cartridges last more than a refilled or recycled cartridge and are reliable and quality products. The firm will also open nearly 1,200 cartridge stores in the country to promote its originals in the market. “70% of the printing technology is the cartridge and its not just a price game but quality also matters.Hence we are forcing customers to be educated on the refilling cartridges,” says Puneet Chaddha, director of supplies and graphics imaging business at HP India. Alok Bhardwaj, vice president of Canon India, says, “Customer at present seem to have a short term view of the scene, choosing price over quality, but what they fail to realise is that in the long term a non-original cartridge may end up harming the validity of the original equipment.” Canon, too, plans to increase the number of outlets to 250 in six months. Cartridges account for 25% of the revenues for the printing major, which its is looking to scale up to 50%.

The cartridge industry has now even got associations such as CRTAI (Cartridge Recyclers and Traders Association of India) and ICRRA (Indian Cartridge Remanufacturers and Recyclers Association), both formed late last year. Says Shashank Ruiwale, President, CRTAI,The industry body is looking to establish a Standardized Test Methods Committee certification, which is a specification followed by cartridge OEMs and remanufacturers globally, among Indian players as well, apart from educating the yet unorganised section of the industry about intellectual property matters and technological upgradations.”

Meanwhile, ICRRA is also working on standardisation. “The perception of the industry is bad at present. We would want to change that in addition to approaching the government for getting the CRR industry SSI status,” says Deepak Jalihal, secretary. ICRRA.So where will this Big Fight in this market lead to? Says Mr Jalihal, “There is an opportunity for co-existence in the market in India, but for that firstly, the disorganised players need to come together and secondly, the counterfeiters’ situation needs to be addressed aggressively by both parties.” On the other hand, the OEMs aren’t so sure. “Coexist? Yes, definitely, but there is question mark on sustained coexistence,” says PV Vishwanath, HP’s sales director for Asia Pacific.

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January 31, 2008 at 1:56 PM