Ricoh faces a gathering storm after shifting its branch-based MFP business to 21 lucky dealers.
On April 1 Ricoh announced the sale of its MFP MIF from its branches to 21 dealers. Five of those selected had previously acquired MIF from Ricoh’s direct operation. According to our estimate, Ricoh has approximately 450 dealers. The selection of the 21 was easy to understand as they represent Ricoh’s largest dealers and are generally considered industry leaders.
Paramount to Ricoh’s thinking had to be protection of that MIF. The company needed some assurance that the dealers they were to select would be less likely to sell and had a long-standing relationship with Ricoh. It is obvious Ricoh had to feel totally comfortable with those dealers that were offered the MIF.
On the surface, the news that Ricoh was selling off its MFP MIF to dealers should have been cause for celebration by their independent channel partners. Unfortunately Ricoh’s execution of the plan left a lot to be desired.
The major problem appears to be the sale of direct MFP MIF located in a territory of an existing Ricoh dealer to a competitive dealer. That was what had to sting the most. The most Ricoh dealers who reacted to this news most vocally were those who were passed over in favor of a competitive dealer. In an area where two Ricoh dealers existed, one was selected. The following e-mail was sent to us from one of those dealers.
It is my personal opinion that Ricoh did a severe disservice to many of their loyal, hardworking dealers. I also feel Ricoh has completely underestimated the repercussions that will occur as a result of their decision. The fact that Ricoh has chosen to partner with a select few out of over 400 current dealer partners reeks of collusion and disloyalty. Not only did they have a select few dealers in mind from the beginning but they did not even take the courteous step of allowing all dealers to be a part of the negotiations, even if it was just a smoke show to save face.
Jim Coriddi, vice president dealer sales, has been burning up the wires talking to dealers and explaining the process that was taken and the benefits that will accrue to the dealers because of the decision to downsize the direct operation. One thing is for sure, Ricoh dealers will be able to hire quite a few well-trained techs. Dealers also have the option of hiring the sales people from the locations where the MIF was located.
Fundamentally, the real benefit to all Ricoh dealers is that they will no longer have to compete against Ricoh branches for the MFP business. In addition, we have to assume that the direct operation was losing money and therefore consuming a significant portion of profits from sales to dealers. That means a greater amount of resources to dealers and that is the message Jim is communicating. It makes sense and we believe that will be the ultimate outcome.
As for how Ricoh went about selling off the MIF, it would have been difficult at best to include all the appropriate dealers in the discussion. This had to be kept confidential and the more dealers involved the more likely someone would talk. That could have resulted in some very negative consequences for Ricoh. There is the human factor as well—Ricoh employees who were going to be out of a job.
Balancing all of this could not have been an easy task. However, we certainly understand the great discomfort coming from some of the dealers. Unfortunately, there will be consequences for that. It will take some time for those dissatisfied dealers to get their focus back on selling Ricoh product, particularly if they carry multiple lines as 62% (from our most recent published survey) of them do.
The next Ricoh Convergence will be in the fall of this year. The main task for the Ricoh dealer group is to rebuild fences for the next five to six months. There is a great deal of misinformation and our advice to Ricoh dealers is to simply hear the company out.
The situation is a fait a compli. There is nothing anyone can do to change it. The task now becomes for each affected dealer to determine if Ricoh acted in good faith and did the best that they were capable.
We had an initial conference call with Glenn Laverty, senior vice president, Ricoh America’s marketing and Jim Coriddi on April 21 to discuss the decision to sell MIF and share some of what we had heard so far from dealers. We have a follow up meeting scheduled for May 18 in Malvern, PA with Peter Stuart, executive vice president Office Solutions, Glenn and Jim. Representing The Cannata Report will be CJ, Scott and me.
Our intent is to continue the discussion. For those of you who would like to share your thoughts with us please feel free to do so. We have already discussed this with several Ricoh dealers and heard from others via e-mail. We will consolidate what we hear from the dealers and ask for a response from Ricoh.
Whatever you choose to share with us will be presented in a collective manner and no dealer will be identified.
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