As much as the average office technology dealer likes to think they’re in the office technology business, the reality is they’re just as much in the supplies business if not more so. As a result they need a consistent and reliable source for their supplies needs above and beyond what they source from their OEMs. There’s a lot of suppliers to choose from and with that in mind we spoke with a cross-section of suppliers and a couple of dealers about dealer expectations and what they can realistically expect to happen when working with a supplies partner.
Andrew Ritschel
Electronic Office Systems
“When margins are critical and your price you’re presenting to your client is so critical and room for error is not there, or room for possible hidden dollars are not there, we need your best prices up front,” adds Andrew Ritschel, president of Electronic Office Systems (EOS), in Fairfield, NJ. “We don’t need if you hit this level or this level you’ll get these dollars back to you; that’s great, but if you can’t price it right up front, you’re not getting the deal.”
The bottom line for Ritschel when it comes to negotiating with his supplies partners is making sure that they provide him with regular low prices and great service.
Datasource Ink, a dealership based in the Chicago area doesn’t sell hardware at all, but instead has a booming supplies business. Because of that focus, it’s important that they have strong relationships with their supplies partners, including Clover, ILG and MSE.
“The three things I need to have to be successful in this business are price, quality, and delivery,” states Jim Vitiello, president of Datasource Ink. “Most partners can deliver on all three of those, but core constraints have become a big issue.”
Jim Vitiello, Datasource Ink
What Vitiello has found is that this issue has made it more difficult on delivery. “Everyone’s fighting on the OEM cores so you need to diversify your partners to make sure you get the products you need,” says Vitiello. “You can’t put all your eggs in one basket.”
When it comes to negotiating, Vitiello’s philosophy is if the price from one manufacturer to another is no more than 7 percent higher, he’s fine with it. “If it’s more than that I say you have to give me a better price otherwise I can’t do business with you,” reports Vitiello.
Asked what he needs to know in advance about the products before he buys, he cites IP compliance. “I don’t want a manufacturer coming after me because one of my suppliers isn’t IP compliant,” says Vitiello. “The other thing is how quickly they come out with new products because that affects my profitability.”
It’s also critical to know upfront how the supplies partner handles different issues. “How I expect them to [handle these issues] and how they do are two different things,” notes Vitiello.
Many supplies partners take back problem products no questions asked, which is the same policy Datasource Ink offers their customers.
On the supplier side of the business, Matt McLeish, vice president of sales & marketing with Parts Now reports that one of the biggest things he hears time and time again from dealers is that they expect consistency whether it’s quality, pricing, delivery, or logistics. “In our part of the world where it’s more parts than toner, there are a lot of small players who struggle with consistency and that’s something we’ve tried to focus on and create a stable platform that our customers can rely on,” says McLiesh.
Overall, he finds dealers’ expectations mostly realistic. “The only time we sometimes have trouble is because we sell both OEM and remanufactured parts, and with toner there’s a significant difference when you buy a reman toner or cartridge from an OEM from a pricing standpoint. For some reason there’s an expectation that it’s the same as OEM. It’s not and that’s why you get a significantly lower price.”
Negotiation is clearly the name of the game in all business transactions and like most other vendors Parts Now offers discounts based on volume. McLeish recommends quarterly business reviews with suppliers, which offers an opportunity to define services, support, and pricing.
Parts Now operates on a tiered pricing level and each customer falls into a certain tier depending on volume, whether they have an MPS contract with Parts Now, loyalty, and other factors. The stronger and more varied the relationship, the better the tier.
When it comes time to negotiate McLeish says the worst way to do it, and this happens way too often, is being reactive and transactional. “They need a price right now because they’re trying to put together a deal; that’s no good. Those things happen, but you’re typically not going to get the best price or opportunity from us doing it like that. Whereas if we can sit down and put together a program agreement that says these things, that’s the way to do it.”
When negotiating there are certain questions that are helpful to ask up front and McLeish recommends that dealers find out everything they can about the quality of the product, manufacturing standards and where they procure product from.
“Ask about IP and if they’re in compliance and what kind of parts go into the manufacturing process,” adds McLiesh.
Also important is deliverability such as the supplier’s operating hours, delivery schedules, carriers used, and any other logistics related to delivery.
David Concors, vice president of sales at Supplies Network, has found that depending on a dealer’s business model expectations may vary.
“Supplies Network specializes in direct drop-ship capabilities and the more common demands include competitive pricing and freight, knowledgeable sales reps, accurate and timely shipping, frequent ‘in-box’ promotions, ability for dealer branding, back-office integration, and an overall value driven relationship,” says Concors. “We also offer an MPS platform that brings vastly different dealer expectations.”
On the negotiation front Concors says there are numerous areas of buyer/seller engagement and each dealer has their individual hot buttons. “I prefer to focus more on how our organization can complement and assist dealers in being more successful. Many times having the ability to help drive end user retention and acquisition programs is more important than focusing on the cost of a handling fee.”
Like McLeish, Concors has some advice for dealers about negotiating with their supplies partner. “Take into consideration the value offered by each wholesaler and align their business and negotiations accordingly,” he says. “We tend to have more mutually beneficial relationships with dealers focused on longer-term strategies. This affords both the dealer and Supplies Network the opportunity to collaborate on overlapping initiatives. For example, we offer frequent manufacturer programs driven by significant pricing discounts. Loyal and frequent customers reap the majority benefit vs. dealers seeking a relationship based solely on lowest product price.”
When it comes to the questions dealers should be asking their supplies partner Concors suggests considering all the variables inherent in a buy/sell relationship. “For example, product price, handling fees, freight costs, manufacturer rebates, program rebates, etc. We built our model to reflect these at time of purchase to specifically eliminate any surprises.”
Tom Day, West Point Products
Issues are inevitable when dealing with parts and supplies and Supplies Network recently introduced customerCARE to make issues, well, less of an issue. “This department focuses solely on issues ‘after the sale’ to provide timely and best in class customer service,” reports Concors. “We direct all dealers to this department.”
Tom Day, president of West Point Products, says what dealers typically expect from their supplies partner depends on their own business model and what attracts them to West Point Products in the first place. “Our customers have a wide range of needs, from extensive product offerings to MPS support, which we have treated as the basis for our go-to-market strategy. Our goal is to be the one destination for all imaging supplies, and to offer an extensive menu of value added products and services that help our customers become more successful as a result of their partnership with us.”
Once things get down to the negotiation process the approach is to take into consideration all aspects of their relationship with the dealer, and put together a total solution that makes good business sense for both sides. “This approach fits with our ‘one destination’ strategy, and holds a great deal of benefit for our dealers as well,” notes Day.
There tends to be a right way and a wrong way to handle any negotiation and Day offers his opinion on how dealers should approach this. “The smoothest negotiations are those that are approached the same way by the dealer as they are on our side. We want to be able to offer a solution to our dealers, but that is only possible when we have a sense of where the opportunity is to do so. The more information the dealer is willing to share and put on the table, the more we are able to work with them to come to the best possible solution for their business.”
Asking the right questions is essential and Day feels that it’s important for the dealer to understand the legal implications of the products they are selling. “Intellectual Property considerations and the First Sale doctrine remain highly important issues in our industry, and dealers would be doing themselves a disservice by not fully understanding the impact these things can have on their business,” emphasizes Day.
“West Point Products is able to guarantee that our products are IP-cleared and adhere to the First Sale doctrine, meaning that all empties used in the remanufacture of our cartridges are sourced in the United States. This guarantee protects our dealers from potential litigation that could put their businesses at risk. In our opinion, all dealers should be asking their suppliers of remanufactured imaging supplies for the same guarantee.”
Besides the legal information pertaining to intellectual property and the First Sale doctrine West Point places a great deal of emphasis on the investments in quality that the company has made to ensure its products offer the best possible performance. “Our recent launch of ColorLogic is just one example of this, and encompasses years of research and development, proprietary process, robotics, and automation in our color technologies,” explains Day. “We recognized early on that quality and performance were the driving factors of success for ourselves and for our dealers, and continue to emphasize the important benefits our proprietary technologies offer to our customers.”
If you ask Steve McBride, GM for Katun’s North America Business Unit, about what dealers expect when negotiating a supplies contract it’s that the product perform at the level that the OEM product performs at. “We set that as a benchmark,” states McBride. “And in conjunction with that is that they would save 20-30 percent from the OEM and lower their cost per copy.”
McBride adds that for most dealers, Katun can actually save them anywhere from 20-40 percent based on their level of participation. Some of those discounts are set through programs with dealer organizations like CDA. “From there it’s massaging that to determine the best rate to save money,” says McBride. “We have one product that can save them 30 points and another we can only save them 20 points on. The negotiation really is tied to wrapping around programs.”
Katun also has partnerships with BEI and e-automate, so it often comes down to negotiating through those programs to determine what actually works best for the dealer in Katun’s menu of programs and opportunities.
As far as questions, McBride recommends that dealers make sure the products don’t infringe on patents, that the product has been tested, and that the supplier has the distribution and support in place so there will be no interruptions in the flow of product. “If I was a dealer the last thing I need is a disruption because somebody sued somebody and I can’t get that product at X dollars and I have to pay Y dollars and that messes up my whole cost per copy,” emphasizes McBride.
When issues arise, Katun has a technical services group that technicians can call at any time. They also have a no questions asked one-year warranty on all of their copier products and a two-year warranty on all printer products.
