Our July 2nd episode of Fridays with Frank drew some attention from both manufacturers and dealers.
We also heard from a former manufacturer executive. He made some very interesting comments. We cannot share with you who the person is because we want to ensure he suffers no consequences from speaking from personal experience.
“Scott and Frank, I’ve been enjoying the Fridays with Frank series. I congratulate you both on a good product. Today’s episode rings a giant bell. There has historically been a lack of high confidence in the OEM ranks for the dealers and resellers. For a long while, they have felt that they are competing with their dealer channel partners.
“The high-end production space has been the holy grail and hopefully the OEMs will realize the true value that their dealers have and offer them the entire range of products. The trust factor is often a question, or at least on the table. I must say that over the years, this has gotten slightly better.”
What amazes me the most is that the manufacturers that produce extensive production print lines do not understand the negative consequences for the dealer when they restrict or impede the dealer’s ability to increase their participation in production print. If you were able to go back and read what we wrote in the 80s, 90s, and the beginning of the 21st century, you would understand what and why we are saying this.
The message was always the same. Dealers must move upstream. There is only one move (if we are talking about print exclusively) a dealer can make and that is into the production space. The more successful dealers are always quick to adapt and take advantage of what technology is on the table. The question remains why would manufacturers hinder their dealers?
Two manufacturers have sold SMB MIF to dealers and (we believe) others will soon join them. The pandemic has demonstrated the vulnerability of selling direct. Investments in real estate, administrative personnel, inventory including parts, technical support, and more are needed to sustain a direct operation. A manufacturer has none of that when you sell through an independent dealer channel.
We have been repeatedly told that direct operations selling into the SMB space are profitable. If you believe that we have a historic bridge that we would like to sell you that connects Brooklyn with Manhattan.
How should dealers respond to this and get into or expand their sales in production print? If you are representing a manufacturer that does not provide production print you need to take on one that does. You can and should remain dedicated in the MFP world, but you need to broaden your footprint in the market.
Who is out there for dealers to talk to? There are some manufacturers to consider. You have Xerox that can provide some competitive production-type products. Kyocera has begun developing this space with a single product. That would not be a bad idea. Epson in the wide-format segment would also be a good choice. Attend the Printing United Conference in October and walk the floor and see what is there. Scott and CJ will be covering that show while I moderate an executive panel for SDG in Albuquerque on October 6. They will have much to share with you.
If you are a Konica Minolta or Ricoh dealer, it is there for you. Both companies need their dealers to be involved in production to meet their marketing objectives. They also embrace the concept of their dealer partners selling into the production space. If you go that route, make sure you have a firm understanding that you have access to the whole line.
We would go one step further. Whomever you decide to enter a production print relationship with we would recommend dealers ask BTA General Counsel Bob Goldberg to write a contract that protects dealers from being frozen out of products on the upper end of the product offering. Based on what I know and what I have seen you need to protect yourself. Production print is serious business and requires a significant investment. If you are prepared to make the investment, do it with a partner that believes and supports the dealer with everything they manufacture.
Allow me to repeat what I stated on Fridays with Frank. Is production print for every dealer? The answer is an emphatic no. However, the 20% that sell 80% of the total sales emanating from the dealer channel sure as hell can. For the rest of the dealers, there is light production, wide format, and lower cost label printers. These three segments can be very profitable and help compensate for an eroding A3 MFP MIF.
Allow me to give you one more prediction that hopefully provides you with some positive reinforcement. Between 2023 and 2024 a major manufacturer will announce that they will be ending their manufacturing of A3 MFPs. The one thing we are not sure about is how much longer they will continue to support those products. Does that mean every A3 manufacturer will do the same? The answer is no. Just be aware and begin preparing the steps necessary to diversify your business.
We have previously discussed in detail the opportunities aside from production print. There is no need for me to repeat all that here. You want us to continue this dialog? Then please send us your questions and we will address them on Fridays with Frank.