The Challenge of Entering the Wide-Format Market15 Sep, 2008 By: Henrik Vestermark of BERTL imageSource
The Challenge of Entering the Wide-Format Market
You most likely have been successful with your own small-format equipment
dealership and are considering ways to expand the business into other areas. The
wide-format market seems like an attractive market. First of all, you are most
likely selling small-format office equipment, so how hard can it be to go wider?
After all, isn’t it the same technology? So why shouldn’t expanding into
wide-format equipment be relatively simple?
If you are considering becoming a wide-format dealer, here are a few things
you need to know in order to be successful.
The wide-format equipment marketplace includes:
-wide-format MFP systems
The wide-format scanner market is by far the smallest of these equipment
types, and the wide-format printer market is the largest. Overall the margin to
expect is small, but with both printers and MFP systems, you could at least
expect a steady stream of revenue through the sales of consumables to your
customers. Wide-format scanners have virtually no consumables. This situation
presents a special challenge for the wide-format scanner market since all
revenue is generated with the sales. Granted, if you treat your customers
nicely, they will probably buy their next scanner from you five years down the
road. But, if you offer a scanning application, you do have the opportunity to
specialize and upgrade the application as needed.
Wide-format MFP systems are a fast growing segment. Traditionally serving the
black and white copier market, this technology is now moving into the color
arena as well. While Océ & HP are the big guys in color, KIP, Ricoh, and many
others are moving into this area with hybrid solutions that integrate color
ink-jet printers from a variety of different sources.
Wide-Format Printer & Scanner Market
Today wide-format equipment is successfully deployed in various industries,
including: CAD, GIS, reprographics, in-house reprographics, photo labs, graphic
arts, in & out door signage and vertical market segments
The Solutions Matter
Customers want and need solutions. Reprographers combine a scanner and a
printer with a software application that scans and print documents. Within the
CAD world there is a need for archiving and printing documents as well as
importing legacy drawings into a CAD program.
Fast retrieval and tracking current versions can be daunting without the help
of an electronic documents management system (EDMS). In an EDMS system users can
scan media, index the content, and save it in a database for later retrieval.
The MFP systems are targeted at print or copy shops that need a fast and
efficient solution for walk-up copying needs or handling of large copy jobs.
The software application is probably the most important component of a
solution, and often it is the only differentiation parameter you have.
Therefore, offering a rich set of software packages that address the needs of
your targeted industry is mandatory for success.
Scanners and software are a great way to improve your portfolio, however you
still are missing a critical component — the output device. Without a printer,
users can only flow from the original media towards an electronic form, but not
back to media. Believe it or not, we are still using more and more paper.
Whether you use standalone components or go for a copy solution, it doesn’t
really matter what company manufactured it. What matters is that your solution
is fully supported from a single point of contact.
Exposure is Everything
If you already have customers in the wide-format scanner industry segment,
you are off to a great start. If you are completely new, you have some work to
do. Exposure is everything, and you need to tell potential customers who you
are, what your value propositions are, and why they should buy from you.
Traditionally, you would want to tell potential prospects about your company
and your offerings. Today, there are old and new ways to reach your prospective
The old school, traditional way is to use magazine ads, brochures, fliers,
direct mail, and TV and radio ads. The new way is via the Internet. Here you can
get exposure to the whole world with one ad. To be sure, it is important to use
both ways of contacting customers. Customers are used to being able to find
relevant information fast, any time of the day or night.
The Internet is growing all the time, and in order to find potential
customers interested in your product, you must use many different Internet
tools. It pays to pay attention to your Web site. Update it often and be smart
in how you organize information. Most new prospects have an attention span of
less than 30 seconds for a Web site. So, if you don’t catch them right away,
they are probably lost forever.
What to Expect
If you decide to become a wide-format scanner dealer, what kind of margins
can you expect? If you plan to sell to state or local governments, you will
quickly find that laws typically require that they receive at least three bids,
and in general this means that the lowest bidder wins. Expect a typical margin
of 6%-15% when selling wide-format scanners. When selling to private entities,
you should expect a slightly higher margin of 10%-20%.
For wide-format printers, it’s even tougher. If you don’t have any leverage
or past selling history for wide-format printers, you most likely will need to
buy yourself in. For example, Canon uses a point system where you earn points
for every printer sale and then get a bonus on the backend that raises your
profit into the range of 5-15%, depending on your success.
Wide-format MFP systems are likely the most profitable. If you are in with
KIP or Océ or others alike, you will be a full-service dealer. Therefore, with a
sale you also sell full service and maintenance contracts, which is a very
attractive revenue stream, plus consumables. For sales in this area, the
important component is not the sales, but the steady revenue stream that arises
from that sale — the corresponding consumables, service and maintenance.
Overall this news does not sound too bad, considering the low margin on the
wide-format printer market. However, do expect some tough start-up times when
you make the jump.