The company’s latest partner program is raising a ruckus in the independent dealer channel.
For the last few months, I have been hearing from dealers about HP’s Amplify program. At first, I reached out to HP and asked to speak to someone who had sufficient authority to give us answers to my questions. I believed that the people suggested would not be able to answer our questions. I moved on. (Editor-in-Chief Scott Cullen’s did interview an HP representative about the issues surrounding HP Amplify for this month’s cover story.)
I also reached out to Bob Goldberg, BTA’s general counsel, and asked for his thoughts. He stated that he was advising dealers that if they are willing to give HP the names of their customers, they should get an NDA that clearly states that HP cannot use the information provided by them for sales or marketing purposes. He added a separate note: “Find another A4 (MFP) supplier.”
I interviewed a dozen dealers from different parts of the country and came away with sufficient information to form an opinion. In addition, I spoke to former HP employees about this program. I also was given program booklets provided to dealers by HP.*
What is Amplify? I started by reading the literature and the press release and this is what I believe it to be.
It is really all about toner and who gets to sell it.
- The dealer must inform HP as to who their customer is.
- Dealers are asked to build an e-commerce website.
- They must consent to an unannounced audit which may consist of checking both physical inventories and the dealer’s records of all HP inventories at any facility the dealer may use.
- If the dealer is found to be in possession of counterfeit HP products or appears to be facilitating grey marketing, counterfeit or non-authorized HP products are found to be traceable to the dealer, HP may terminate dealer participation in any or all HP programs and/or terminate the partner agreement with cause immediately.
Two HP executives conclude the press release with the following edited statements:
“HP and its partners have an enormous and exciting opportunity to reinvent the way we do business and our route-to-market……requires overcoming system inadequacies, legacy habits and embracing new business models.” Luciana Broggi, global head of route-to-market, HP Inc.
“HP Amplify not only makes it easier for partners to do business with HP– it provides partners with a clear path to ready their business and succeed in today’s environment – to capitalize on emerging trends…..in the evolving customer buying journey.” Christoph Schell, chief commercial officer, HP Inc.
Here is what the four dealers that were favorable had to say:
- One dealer stated they are participating in the program because of a very large HP MIF. The number was more than significant, and it was easy to understand why they were sharing the actual number with us.
- This dealer is selling to very large HP “named accounts” and HP end user salespeople have direct contact with his customers as they are either situated in their geographical territory or are named accounts. He indicated that HP already knows who his HP customers are.
- In this case the dealer stated that the margins are very good if you comply with all the requirements. They are doing very well with the program.
- This favorable dealer offered to counsel dealers who were in distress about Amplify. “I agree with dealers expressing their sentiments on the amount of information that HP requests. HP can be frustrating at times, but we have been doing business with them long enough that we have adapted to their requirements. We have found that if you deal with their requirements and other quirks, they can be a great partner.”
As for the others – take your pick – HP was called untrustworthy and worse. One dealer was notified that he must comply with all the program requirements or his qualified status will be moved to not qualified and lose all access to HP print/supplies. He is dropping the HP line and moving his business to another manufacturer.
Another dealer used a more graphic term in describing this program. He referred to it as “BS” and that HP was only interested in getting rid of all the compatibles. He too said he must move to another manufacturer.
A third said he was not doing that much business with HP and considering what they were asking for him to do had no intention in going any further. The rest have a decision to make, and said they had serious concerns as to how to deal with it.
Allow me to sum up my opinion: Amplify is not that difficult to understand. It has three primary purposes:
- Knock out compatible toners.
- HP wants to be able to provide automatic shipments to every HP manufactured machine sold by a dealer. This program helps them get there.
- Provide a vehicle to compensate their HP end user sales teams for machines placed by dealers in their named accounts and geographical territories.
Amplify is a means for HP to compensate for their loss of clicks from their MFPs and printers. Think about it. If dealers eliminate usage of all HP compatibles, they reasonably could expect an increase of an estimated 20% in toner sales. At the same time, it will end up lessening the profitability left in MPS for dealers with HP placements.
The dealers have options with Kyocera and Lexmark. We also believe that manufacturers such as Sharp, Canon, Konica Minolta/Muratec, Toshiba as well as Epson and Brother can provide competitive A4 MFP product. All of them know and understand the dealer business model that relies greatly on relationships with their vendors. HP has struggled with this for years.
Dealers must accept the fact that clicks will continue to decline in the SMB space. That continuing erosion of toner sales will lead to more of this type of behavior from HP not less. We also have Chinese chip technology that will eventually prevent off-brand manufacturers from producing compatible toners.
*HP U.S. Qualified Partner Programs and HP Print and Supplies Quality, Customer Service, And Online Sales Policy – HP Fiscal Year 2021 effective November 1, 2020.
Editor’s note: Frank welcomes commentary on this column. Comments will be published on www.thecannatareport.com or in a future issue.
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