The future of the dealer channel hinges on diversification.
As we approach the new year, it is time to take out the crystal ball and see what 2021 will bring us. Unless we get COVID-19 under control, it will be extremely difficult to get the economy resurging. Let us be optimistic about an available vaccine that works and gives people a sense of confidence to get the economy back on track.
The challenge for dealers will be the continued decline of clicks. In our recent Survey, 88% of the dealers said that is their biggest concern. If the focus remains on restoring clicks, the battle will be lost.
To get the business back to pre-pandemic profitably, diversity in revenue streams needs to happen. We believe the most logical opportunity is wide- and large-format inkjet, which is poised to be the quickest and one of the less demanding vehicles for dealers to latch onto.
The biggest application, and by far the most profitable, will be packaging. It is a tool for a waiting market. There are thousands of commercial printers that also need to diversify their businesses. The products are available, and there is a demand.
The second is expansion of services into telephony. We have addressed this before and are seeing some dealers embracing it. Up to this point, the success rate of this strategy has been difficult to track. We will keep looking for answers to this question.
Due to declining clicks, dealers will need to change their compensation plans to focus on net new business. With acquisitions continuing, there will be opportunities that allow those dealers who are acquiring to take the newly gained MIFs and step them up with hardware that is more efficient and less expensive.
The use of inkjet MFPs will enable dealers to be more aggressive in MPS and move a greater number of machines. While machine cost will be lower, ink sales are very profitable. Companies such as Clover Imaging Group are already providing some inkjet supplies, and others will quickly expand into that area.
Software will continue to improve communication technologies such as Skype, Zoom, and Microsoft Teams. This will be the area that offers the greatest demand for the channel. These tools will expand to include presentations to larger audiences with less difficulty than is currently being offered.
Physical security is also a tool for diversity that we see dealers gravitating toward. Dealers that are currently providing network support to their customers can easily expand into this area and gain new revenue opportunities.
The demands placed on the channel will cause those challenged businesses to diversify in the broadest and quickest possible ways. In some cases, the opportunities will engender the addition of net new customers, and in other cases, the sales of added services and product offerings will be sold to existing customers.
Last, but far from least, we will be closely watching dealerships that add consultative services to improve the network performance and the overall efficiency and profitability for their clients. In these situations, the measure of revenue performance will be gauged by the increase of dollars extracted from existing clients. Overall, the profit levels may decline, but the increased income will provide a path to sustainability.
In January, our organization will celebrate its 42nd anniversary. With more than four decades of experience following the dealer community, we do have some understanding of what dealers need to do to maintain sustainability. Like our dealers, we are diversifying—into research and providing our clients with new and different content that answers their most pressing questions.
While 2021 will likely continue to offer the greatest of challenges, we remain optimistic that we can all adapt and prosper. As the old sportscaster Bill Stern used to say at the end of his radio commentary, “That is my 30 mark for today.”
Access Related Content
Visit the www.thecannatareport.com. To become a subscriber, visit www.thecannatareport.com/register or contact cjcannata@cannatareport.com directly. Bulk subscription rates are also available
