- This topic has 0 replies, 1 voice, and was last updated 9 years, 9 months ago by
.
-
Posts
-
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Staples’ own-brand products have had their contracts rescinded and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.”
- You must be logged in to reply to this topic.