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New Opportunities can be easily eliminated

Back 24 / 01 / 2019 | (No Comments) |

Opportunities are not permanent solutions. In fact, this is what causes opportunities! Hear what Ray Stasieczko has to say.

 

We all know that Clover is the largest remanufacturer in the world. We also all know that the new-built, compatible market is causing a disruption for Clover. Why else would they have released a white paper to resellers championing the benefits or remanufacturing, and sounding the warning bell on compatibles? What we might not want to admit is there is a bigger threat. The threat of the OEMs getting back their long-lost customers by providing them a better experience. Here are my thoughts.

With the current decline in print volume, the consolidation of resellers, the growth of compatible manufacturers and the awareness of OEMs to keep their supply cost competitive. Clover is fast approaching the point where it will collect more empty cartridges than what it sells as remanufactured. That time may have already arrived. In my view, their model is falling. One thing is an absolute: the end-user will not print more, and market share is hard to increase when you are already the largest.

The question for Clover is this: will the compatible manufacturer win? Or, will the OEMs lower their cost enough to claw back the market share they lost when print was growing—a time when customers watched their costs which also gave birth to print management? In the early days of print management, alternative supplies were the silver bullet to lowering an end-users cost. In those days the OEMs neglected to lower cost and this stubbornness is what fuelled the remanufactured business model.

I for one do not believe the OEMs will make that mistake again, especially in a declining use market. When I look at HP’s latest earnings and supply revenue growth, it appears they are aligning with my thinking. So, sadly the continued decline in remanufacturing will cause more consolidation and Clover will have to make some tough decisions regarding their reclaiming efforts. I predict the OEMs will take back market share based both on price reductions and print declines causing end-users fewer concerns to save evolutionary lowering costs.

Let’s look at phone services. More telephony subscribers don’t manage their costs, then do. When was the last time you analyzed your phone bill? Can’t remember? Neither can I. The days of consumers counting the number of pages they have printed and managing print output are also fast approaching extinction. So, here’s a thought. Which current OEM is also a manufacturer of compatible new-built cartridges? You guessed it. So, how long will it be until they deliver their OEM cartridge as inexpensive as their compatible cartridge? I predict it will not be too long.

And here’s another scenario as the war wages between new-built compatible and remanufactured cartridge suppliers. The compatible manufacturers have an advantage which could causethem to win. They could become the manufacturer to the OEM as the OEMs continue to look for lower costs. The fate of the remanufacturer is bleak. The fact is today’s technology allows a new-built compatible to be made less expensively than it cost to collect and remanufacturer an OEM spent core.

When supply exceeds demand, the market must consolidate, and when the market consolidates the fight for market share can become a race to the bottom. OEMs will look for ways not only to lower their production cost, they will stay vigilant in keeping and getting back their lost supply business. We will see strange bedfellows, as they say, through this process.

Back 24 / 01 / 2019 | (No Comments)

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