The fear of the unknown can be most gripping. But business goes on, and the highest-performing dealerships are always prepared to turn on a dime when market forces evolve. The same could be said for the online retailer’s role in the office technology industry.
This week we wrap up our look into the subject of the online retailer and its real/perceived impact on our industry. It’s been repeated ad nauseam that the impact of Staples acquisition of DEX Imaging will soon be made known, especially as the latter ramps up its efforts to add staff across the country. And as many have speculated, it almost certainly won’t be the last pairing to create a new business model to garner (steal, abscond with) customer share.
Kevin Morris, president and CEO of OneDOC MPS, has worked alongside the Doyles in the past and has great respect for the model they have used to grow. For now, all eyes are on them and what happens next.
“I think that companies similar to DEX around the country will look at that same type of scenario and team up with someone to expand operations,” Morris said. “Dan Doyle’s always wanted to be a nationwide player. I believe other companies will look at that model, companies of similar size that will replicate that effort. I think some will sit back for a little while to see if DEX is successful with it.”
Extended Engagement
The key for dealers will be to ensure their clients are engaged at all levels. “If we don’t, we’re certainly out there as a target for these types of companies,” he said. “This is a call for action for us to get our (stuff) together if we haven’t done it well. A lot of people would echo that sentiment.”
One of the keys will be for dealers to continue down the road of offering a more robust menu of services, notes Chip Miceli, president of Pulse Technology. He finds it quite perplexing that there are those members in the dealer community who still do not embrace MPS.
“In my view, that’s akin to running a business and not owning a computer, or having a website,” Miceli said. “Those who have been reluctant to adopt MPS will either do so or lose business and end up being a prime target for an acquisition. We’ll also see more and more traditional dealers adopting managed network programs.”
The next few years will see the heavy hitters emboldened by acquisition, and Dave Clark—vice president of sales for AIS—expects the high-volume aspect of the trend to continue for another two or three years. At the lower end of the spectrum, the smaller dealers will look to exit because they’re either “suffering and being suffocated, or they realize they don’t have the wherewithal and financial resources to keep up,” he said.
The result could well be an attrition rate that’s higher than the industry has ever experienced. “What you’re going to see is a bunch of dealers that maybe nobody expected two to three years ago to be the leaders of the industry because they were forward-thinking way back when to anticipate what is happening now, rather than trying to play catch-up,” he said.
Delivering the Goods
In the long run, according to Clark, dealers need to explore the criteria of what a company needs to do in the channel to ensure it remains relevant and is viewed as a valued technology provider with their clients. That encompasses three elements: the infrastructure, offerings and wherewithal to deliver.
“If you do, you have a great value proposition, then you can ride this wave and it does nothing but grow your business,” he said.
Kevin DeYoung, president and CEO of Qualpath, has been around long enough to see the cycle of M&A and its impact on the industry. The “rule makers” as he calls the larger organizations, take out the smaller “rule breakers”, build capacity and share, amortize out their acquisition, and show profit and revenue growth. That creates a gulf or gap in the market in speed, flexibility and sensitivity. That opens the door for smaller players to re-enter the market and address those gaps in the SMB space, and the cycle begins again.
“You’re always going to have the established businesses which will show up with a different type of model, a different type of transactional profile,” he said. “They’ll start to destabilize the market a little bit until they gain share and become the new rule maker, waiting for the next rule breaker to show up and destabilize them.”
Like his colleagues, DeYoung sees value in staying close to the market and your customers. “You need to see how customers are responding to your value proposition and see how your retention is,” he said. “A lot of these things look good on paper, and in some cases, it boils down to execution.”
