As Time Goes By - The Changing Scope of Copier Distribution9 Oct, 2001 By: Ian Crockett imageSource
As Time Goes By - The Changing Scope of Copier Distribution
we approach the end of a very interesting year in the office technology
industry, I thought I’d use this month’s space to recap recent happenings,
do some critiquing, and maybe make a few predictions. To me, the most
significant threat to the channel is some manufacturers and their various
strategies to obtain and secure marketshare. Ironically, the greatest
opportunity for my readers comes from the manufacturers’ desire to obtain and
secure marketshare. Confused yet? Let me explain.
years, most industry people operated under the assumption that the manufacturers
enjoyed building things and had no interest in selling door to door or “down
the street.” They would offer helpful hints to dealers on how to sell more
machines, but other than Konica and Minolta who had decent branch networks and
Canon who had “subsidiaries” in the country’s three largest markets, they
relied on a dealer channel.
channel started to disintegrate a little when Staples and other mass
merchandisers came into existence and began selling low-end product at prices
below the dealer’s wholesale cost. However, the good dealers were ahead of the
game having already figured out they couldn’t make any money at the low end.
However, other forces were at play.
New Game Plan
Standard (IKON), Danka, Erskine House, and Hillman began buying larger dealers
and felt they could leverage their buying power with their vendors, present
company included. Most of them were very clumsy in their attempts, but it woke
everyone up, especially the manufacturers who had no desire to see the tail wag
plans started to change. Toshiba created a division to acquire dealerships and
Minolta, Mita and Canon acquired a few to save them from going belly-up or just
to make sure nobody else bought them. Moreover, in the last five years, things
have really accelerated. Kyocera Mita began a quasi branch strategy with their
joint ventures. Ricoh, who had already purchased Savin, bought Gestetner,
Monroe, and Lanier and wound with a bunch of direct operations. Then Canon said
to IKON, “What have you done for me lately?” and created an open
distribution strategy by signing dozens of independents. Now they’ve indicated
they’ll have direct operations in the nation’s 20 largest markets.
when we hear rumors that Canon will buy IKON, Toshiba will buy Danka, and Konica
will acquire Global Imaging Systems, we believe them because there is merit.
However, this scramble for marketshare could also be a windfall for dealers.
Almost all of the aforementioned manufacturers are courting quality dealerships
along with ex-IKON and Danka people re-entering the industry, and they are armed
with checks that have several zeroes behind a number.
believe their terms may be strict. Although in my opinion, it requires a huge
investment these days to switch manufacturers or start from scratch, so it’s
only right that the manufacturer participate in the investment. It also seems
right to me that they should protect their investment and ask for a little more
allegiance than they did 15-20 years ago.
a manufacturer these days becomes very difficult. Dealers not only have to be
concerned with the product line and marketing support, they need to be concerned
with their manufacturer’s distribution strategy. So who looks attractive as we
progress through the new millennium?
who tried a limited branch strategy over a decade ago and got the worst of the
IKON/Danka acquisition era, seems poised to once again be a strong player. They
weren’t the first to market with digital products, but the products work and
the dealers are making good money. If they can build their own high end product,
they will once again become a big force. They’re showing faith in dealers,
which is good news for the entire channel.
Mita took some huge marketshare hits when some of their larger dealers took on
another line. However, Kyocera made a great move in bringing back Akihiro Nasu.
I’ve always had a tremendous amount of respect for him. He came to this
country in the early ‘70’s with a limited English vocabulary and built a
distribution channel that included over 500 dealers, and he did it without the
enormous resources of most of his competitors who developed their brand with
consumer-driven products. The good news for Kyocera Mita is that those large
dealers haven’t entirely dropped the line, so if the next series of products
are winners, they may return to the fold. A footnote to that is it may be time
to drop Mita and concentrate on one brand name. It would be an unpopular move,
but much easier to market. Plus, they should get out of the branch business.
has continued to receive good reviews from my Konica clients. Double-digit
growth has been a given for those clients the last few years. They may have the
largest branch network of any manufacturer, but most of them are “sleepy”
and only focus on major accounts. My guess is they would get even better reviews
if they eliminated them, at least in markets where they have a significant
dealer. A competing branch, even if it’s not all that competitive could cause
a dealer to go elsewhere.
also has a widespread branch network that in a number of markets is a threat.
They didn’t lose many dealers during the IKON/Danka buying frenzy, which could
be considered good news or bad news depending on your perspective. Minolta has a
terrific color product, but hasn’t really had the “hot box” since the
has taken a page out of the General Motors’ book and has significantly
positioned themselves under the Ricoh, Savin, and Gestetner labels. They’re
manufacturing some good product, but if they continue the direct strategy, it
might hurt their dealer relationships. Even Cadillac isn’t what it used to be
and Oldsmobile is going away.
brings me to Canon and their attempt to rule the world. Fortunately for them,
they have been the standard for color since color was first introduced. Plus,
they’re one of the world’s heaviest advertisers. However, this latest branch
strategy on the heels of their open distribution strategy may have them painted
in a corner. One little R&D or marketing glitch and the walls may start to
crumble. I’ll use one word to support this theory: Xerox.
Failures, Decisions, And Involvement
fact, as I look back at my association with the office technology industry,
there’s a common thread throughout the many setbacks or failures I’ve
witnessed and it’s arrogance. Xerox has experienced it, IKON and Danka (Kodak)
experienced it, and so have some manufacturers. Several years ago, HP executives
informed the dealers that they were now entering their world, and it was time to
live with limited hardware margins and a scarce aftermarket. Little did they
know, dealers were using the HP name to get a foot in the door, and then selling
someone else’s product. Recent HP layoffs have reached the size of a small
how does one make an educated decision? The first is showing up at ITEX 2002.
The BTA Expo, for all intent and purpose, is now part of the copier industry
history. This is partly due to the lack of attendance by the dealer channel and
the manufacturers. According to various sources, the show evolved into something
the industry didn’t want. However, if you want the dealer channel to survive,
you, along with the manufacturers, need to show support for a dealer-focused