Suppliers and wholesalers have been diversifying since the dawn of time. So when we write about diversification, it’s not like we’re talking about a new business strategy. What we are talking about are new products and services designed to uncover new opportunities for themselves and their resellers.
Tom Walter
Diversification for Toshiba America Business Solutions’ aftermarket division centers on AquaAce specialty media. Tom Walter, vice president of distribution and aftermarket sales, says that specialty media is key to finding business outside of toner. The most popular AquaAce media is 12 x 47-inch glossy, double-sided banner paper. AquaAce is also available in letter, legal, and ledger sizes.
“These papers basically have the same properties as lamination,” explains Walter. “They’re water and light resistant, tear proof, smudge proof—all the qualities you’d receive in lamination is done in a single path through the Toshiba MFP on the specialty media.”
This media has an additional benefit because there’s less energy consumption compared to laminating.
“This paper fits the need of any application where you’d want to laminate, but where you want to reduce costs and have less of an impact on the environment,” says Walter.
In addition to Toshiba’s unique Aqua ACE specialty media offerings, the company features a comprehensive selection of consumables accompanying its array of thermal barcode printers, another area of diversification that Walter is excited about. He reports the range of media is ideal for virtually any labeling application – from ribbons and labels to RFID tags and cleaning products – within myriad vertical markets.
Luke Goldberg
For Luke Goldberg, global SVP, sales & marketing, Clover Imaging Group, diversification is concentrated on services and products. On the services side there’s many different things Clover is doing, but whatever they do and wherever they go, there’s one ultimate goal.
“As the industry matures, resellers are expecting more from their suppliers than just a company that can move boxes from Point A to Point B,” emphasizes Goldberg. “So taking these services and wrapping them around products to make those products even more attractive in terms of value is the essence of how we use services. We’re not making money providing these services; we’re providing these services so our dealers are empowered to sell more of our products.”
The services Clover is most renowned for are its MPS offerings—a menu of turnkey Managed Print Services sold under the Axess and MPS engineered solutions brands from its West Point and MSE divisions. This encompasses everything from an entry to MPS to full blown MPS, including color, cost of ownership, service and fulfillment, parts, training, and everything else.
“We provide those services because we want to offer a platform where our dealers are able to sell more of our consumables,” states Goldberg. “When you look at MPS the majority of money is still made on service, parts, and toner, not software. The software and service is a vehicle to sell more toner, ink, and parts.”
Goldberg feels Clover has the easiest to use, most comprehensive menu of MPS services that any wholesale provider offers.
“That’s everything from the data collection side and the ability to collect meters, to a program we call Auto Toner Fulfillment which completely automates the process of setting alerts and fulfilling toner directly to a specific department, printer or user within an organization,” he says. “It makes the process proactive instead of reactive.”
For a company whose foundation is toner, ink, and parts, MPS is a natural way to diversify. But you cannot win at MPS unless you market it properly and Clover helps resellers do that via a comprehensive, end user facing dealer marketing program. However, Goldberg acknowledges, “We’re not a marketing company. We want to provide marketing support as part of our value-added services to enable our dealers to increase their presence, create their brand in their own right, and to grow their business.”
That marketing support takes various forms, including a cloud-based program where Clover has created a custom portal for its dealers called ‘Empower.’
Clover’s Parts Division, Depot International, is also driving diversification, offering printer training in various locations across the country multiple times a year. Clover also provides Help Desk support for its parts and MPS customers free of charge. In addition the company is diversifying into IT server and computer parts for resellers expanding into Managed Services.
Goldberg acknowledges that if you’d told him three years ago Clover would be selling thousands of IT, server and computer parts, he’d have said we don’t know anything about that, that’s not our core competency. But it turns out that selling parts is Clover’s core competency.
“It’s just another consumable part for a different type of hardware,” he says.
Speaking of a different type of hardware, as of last year Clover began offering filaments for 3D printers.
“We offer 12 different types in both PLA and ABS plastic configurations,” reports Goldberg.
David Concors
At Supplies Network, diversification also centers on products and services, including MPS and traditional services. David Concors, vice president of sales, reports that in terms of products the company has diversified heavily into printers across all the major OEMs.
“The diversification has more to do with the amount of equipment we’re stocking and the resources we’re hiring,” states Concors.
Supplies Network now has a team of printer advisors who function as an overlay to its sales force. They help resellers source hardware by assessing needs, then align them with the best possible manufacturer rebates and special offers. While predominantly focused on A4, Supplies Network has a similar strategy for A3 and has hired a rep with a copier background to help it expand its presence in this space.
Another area of diversification is wide format. “We sell a significant amount already, but have never formalized that business model,” says Concors. “We’re now aligning more closely with manufacturers to increase our inventory on wide format so that we can attract a wider array of resellers who today may not look to us for traditional ink and toner, but may look to us for a depth and breadth of wide format products.”
On the services front Supplies Network now has a national printer installation service where the company dispatches its network of service technicians to end-user locations to do the onsite setup of printers and MFPs.
“It’s not just printer installation, we also have the capacity to help them take advantage of the best offers, buy in bulk and then manage the storage of those devices so they can take advantage of the economies of scale associated with making a large purchase,” reports Concurs.
Local device management represents another way that Supplies Network is diversifying its services, particularly for MPS customers.
“We have a local device management solution that enables customers to include the local devices that today are typically difficult to manage,” explains Concors. “We incorporate those into our MPS model and assume responsibility for managing the supplies replenishment and the servicing of those devices.”
Last but not least, Supplies Network is offering hardware configurations. “Many printers we sell require software to be loaded or flashing to be done to certain devices, like in Lexmark’s BSD program to make them eligible for the BSD supplies to work properly in the devices,” observes Concors. “We are in the process of evaluating our ability to create a configuration center in our distribution centers to provide that expanded service and minimize the amount of vendors or solution providers our resellers have to rely on.”
Aaron Dyck
The diversification theme at Digitek Computer Products is wrapped around the upcoming October launch of Partner Pro, a suite of business growth solutions for the company’s customers.
“It’s built on sales training, marketing tools, and ongoing resources to help them stay ahead of the industry’s best practices and updates,” explains Aaron Dyck, senior director of solutions sales. “We’re investing heavily in the dealer community and want to bring the industry’s first single sign on access to everything they need to drive revenue for their business, from sales to operations, to marketing.
He emphasizes that this is not a one size fits all. “We’ll create landing pages based on the products and solutions they’re selling, drive traffic to their Website, and help them capture who actually comes to their Website and bring in more leads to their business.”
The inspiration for these new offerings is a shifting industry and the emergence of different solutions—Managed Print, Managed IT, and document workflow.
Partner Pro is actually four solutions. The first is a 10-module training platform on how to sell solutions. The second piece is an online MPS management services training platform that’s designed to help sales reps elevate the perceived value of Managed Print to the decision maker as well as help them challenge the current state of MPS and branch out into more profitable aspects of their Managed Print solution.
The third component is an eight-module, video-based Managed IT sales training platform focused on taking that mainline sales rep that sells a lot of things and helping them identify Managed IT opportunities for their subject matter experts.
“We know subject matter experts are expensive and we want to make sure the opportunities these folks bring forward are qualified correctly and fit the need of what they’re looking for,” states Dyck. “We’re agnostic; we want to complement their back end infrastructure and give them a repeatable training platform across all solution lines that help them go to market and create continuity within their business. We’re in the business of helping our customers grow and the more business they close, the more products they buy from Digitek. If we can help them do that we can leverage their spending to offset these services.”
The last piece is Inbound Marketing that helps customers leverage social media in their marketing efforts. Here Digitek manages the reseller’s social media channels, sets up the content, handles the Website design, and tailors all that information to the dealership.
Gary Willert
LMI is one of those suppliers that started small and has grown exponentially over the years, mostly by focusing on its core business. That’s been changing with LMI’s diversification into printers.
“It’s going to be a huge product line for us and it’s going to grow dramatically,” predicts LMI President Gary Willert. “People always think of OEM so now we’re trying to get them to think that this is like an OEM product, but the cost and cost of ownership is much lower. This makes a lot more sense to put in your business model, and that’s the challenge so far, getting dealers to understand there is a better alternative.”
3D printing is something else on LMI’s radar although nothing concrete is available yet.
“We’re looking at offering this to our dealers because more of our dealers are looking to sell 3D printers,” states Willert. “As they become more involved, it becomes more of a viable product for them and we want to support them with the printers, but at the bare minimum, product support.”
Steve McBride
Steve McBride, general manager North America, Katun Corp., identifies MPS and IT Services as two areas where Katun is diversifying in North America. “We continue to develop [products] that can impact the dealer’s profitability whether it’s cutting costs of parts and supplies, which has been our traditional business in the copier space, as well as moving into the printer space with a more robust print offering both in parts and supplies as well as reman printers.”
In the last eight to 12 months Katun has partnered with some of the leading software companies in the industry with one result, a MPS profit calculator that allows dealers to price out MPS deals and ensure profitability. Katun has also partnered with Print Audit, not only for collection, but print management, providing dealers with the ability to focus on managing their customer’s print environment. Auto toner fulfillment is another area of diversification for Katun.
“Most of these are through a subscription model, [which creates] a recurring revenue stream for us and the dealer,” explains McBride. “We call it our Katun Dealer Fleet Management Program. The dealer can buy a part or all or some of those offerings as well as marry that into their core business with us to get discounts and rebates from those additional offerings.”
Joseph Wu
Another imaging supplier, Green Project, Inc. has diversified into 3D filaments after Green Project President Joseph Wu saw his first 3D printer a few years ago at a CES show. That was also the inspiration for Green Project to start a separate company that sells 3D printers. “It was a simple idea, something different, and could be a disruptive technology,” recalls Wu.
While the company prepares for the release of its first two 3D printers, 3D printer filament sales are growing slowly but surely ever since Green Project starting carrying them in 2013. “We were the first in the industry to offer a 3D filament,” claims Wu.
Brook Douglas, vice president & general manager, Canada, at Parts Now LLC, shares some interesting revelations on how Parts Now is diversifying beyond traditional printer parts and supplies. This past March Parts Now in Canada began distributing parts for service providers of cooling systems, refrigerators, and air conditioners. It’s a new vertical for sure.
“At the end of the day a part is a part,” says Douglas. “We’re taking that same plan and model and expanding that into other programs.”
Brook Douglas
This diversification plays right into Parts Now’s wheelhouse with its core competency being distribution and next-day service on parts as well as same-day service in local markets.
“At the end of the day what that service provider needs is having that part arrive on time whether that be a printer, refrigerator or anything else,” emphasizes Douglas who feels that diversifying into a different kind of part shouldn’t shock its current customers.
Even some wholesalers are diversifying.
“As a distributor we have to diversify and one way we’ve done that is to look at new products,” observes Brent Martin, marketing director for Carolina Wholesale. “The 3D Systems distribution program we put into place in April is one example.”
Brent Martin
Martin feels there are many long-term implications for 3D printing, but patience must remain a virtue.
“It’s going to take a while to build in the private sector,” maintains Martin. “Two areas where we see an immediate need are education and government. We have a dealer base that’s strong in the education market and this is a great opportunity for those dealers.”
He adds that Carolina Wholesale is not necessarily making inroads with the traditional office technology dealer yet, although he feels this is a golden opportunity for copier dealers too.
Acquisitions of other distributors are also helping Carolina diversify. The recent acquisition of Central Office Systems in Vista, CA added a mix of high-end Copy Center solutions such as advanced paper drills, cutters, and letter openers.
A couple of years ago the distributor UniNet diversified by adding a series of short-run, digital label printers to its product offerings. It was a natural way to branch out.
Joe Dovi
“UniNet has a worldwide distribution network of sales, service, and support already set up,” states Joe Dovi, COO & executive vice president. “We can get it to any continent or country very quickly.”
Although he’s not convinced this is a good fit for UniNet’s traditional toner customers, he sees an opportunity for the BTA channel with the company’s two flagship models, the iColor 700 and the iColor 900 (www.icolorprint).
“Manufacturers and label printers need to print short runs of labels and right now manufacturers outsource it or they’re buying labels from a large Flexo house or offset company,” explains Dovi. “They have to commit to large runs, there’s lead times, plate charges, they have to order hundreds of thousands of labels to get a good price, and then end up throwing a lot of that stock out because of regulation changes or other changes [to the labels]. That’s where the short run market comes in.”
Maintaining the Status Quo
Bob Willmes
As much as some firms relish the opportunity for diversification, others are perfectly content to stick to the status quo. As Bob Willmes of Supplies Wholesalers notes, “We haven’t expanded beyond compatible imaging supplies and don’t plan to. For growth we’ve added two distribution centers in Pennsylvania and Nevada this past year with plans for more as well more acquisitions in the coming year.”
That strategy holds true for Ink Cycle, which has been doing what it has always done, offering compatible cartridges since 1992.
“There are certain things we’re good at and certain things we’re not like everybody else,” acknowledges Brad Roderick, executive vice president with Ink Cycle. “One, we attract good people who have a great level of care about the customers. From the beginning when the company was founded, was a level of personal touch and overall quality—every aspect of the business from our abilities to our people to our relationships and what we bring to the market.”
Brad Roderick
It’s not as if Ink Cycle is close minded about diversifying. “We’re always looking at other things,” states Roderick.
For example, a few years ago Ink Cycle investigated a MPS offering. After doing its due diligence and seeing what was needed to make that work, the software, the quoting systems, and the monitoring, they realized they’d have to make a significant investment to enter that market, followed by ongoing investments.
“We looked at what was already on the market and saw what was being done,” explains Roderick. “PrintFleet, Print Audit, ECi and MWA with their FORZA can bring world class solutions. That’s their business, ours is on the product side. So we decided to stay on the product side because the goal for our independent dealers has been the same three things—help our customers win new business, help deliver products and services that help them retain their existing business, and help them make more revenue and keep more profits.”
This Month in ENX/The Week in Imaging
Look for more coverage on “Diversification in the Supplies and Aftermarket Markets” in our weekly newsletter and Website throughout the month of September. There you will find more in-depth interviews with some of the individuals interviewed for this article as well as separate articles, “Concerns about Diversifying” and “More Diversification Opportunities.
