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The Great Office Supplies Caper

Office Products & Supplies - The Big Picture

by Ian M. Elliott | 12/6/16 8:47 AM

I've just concluded a mini-marathon series of blogs that attempted to provide a detailed overview of the workings of the office supplies component of the office products industry. It's a big, complex industry and there's nothing simple about a Twenty-Five Billion Dollar ink and toner market that keeps twelve OEM's, with combined global sales of $170 billion, afloat!

My purpose from the outset has been to provide information that may help smaller, independent resellers to develop a better understanding of the market which may, in turn, help them plot a strategy to improve their business prospects.

For this blog, I've prepared an infographic that attempts to simplify the complexity into a visual with a few key points.

There are five sections:

  1. The market for ink and toner in the United States, although modestly declining, remains very large at around $25 billion as measured in retail dollars.
  2. The aftermarket is facing a disproportionate loss in share because the market for monochrome products (where it has the largest share) is declining at 3 to 4% per year, while the market for color (where it has less than 10% share), is still increasing slightly at 1% or so a year.
  3. The only reseller channel that can make any money selling office products and supplies is the Tier-2 and Tier-3 independents and, only then, if they focus on OEM conversions targeting accounts the Tier-1 resellers currently have a stranglehold over.
  4. The typical Tier-2 and Tier-3 resellers have little to no online authority.
  5. The typical Tier-2 and Tier-3 resellers have poor websites, weak information technology assets, and little to no engagement with a social audience.

In a nutshell, it's a big market that offers a significant revenue and profit growth opportunity. But, the only way to participate, is to enter the digital world and focus on the "blue ocean" customers currently purchasing high-priced cartridges through the Tier-1 resellers.

Should they choose to do so, the Tier-1 resellers could convert more of their customers to aftermarket cartridges. If their sales teams were compensated on profits, rather than top line sales and, if it didn't mean the OEM back-end rebates would be compromised, then they would offer their customers a wider choice of lower cost, aftermarket cartridges.

As I went to some lengths to explain in my recent eight-part series, consumer acceptance of the aftermarket value proposition is not the issue that prevents increased aftermarket share. Instead, the problem is the restricted choice of products offered by the Tier-1 resellers who control the distribution of office products to over 90% of consumers. This has become the physical barrier that prevents the aftermarket proposition from being more widely embraced. Furthermore, nothing's going to change unless the Tier-2 and Tier-3 independent resellers step up and effectively market their value proposition to the current customers of the Tier-1 resellers.

These Tier-2 and 3 resellers have the potential to get themselves and their sales teams motivated with a share of the profits rather than a percentage of top line sales. Unlike with the Tier-1 resellers, the OEM's are unable to influence smaller independent resellers selling strategies with the prospect of back-end rebates that incentivize them not to sell the aftermarket value proposition.

For those smaller, independent resellers who still believe there's a future in the office products and supplies industry, but have been struggling to develop a strategy to take advantage, then;

  • the first step must be to put a 21st-century digital platform in place
  • and then to physically get out in front of prospects and customers in their local markets
  • to build relevant social audiences on relevant social media platforms
  • and then to deploy modern digital tactics to further engage with the audience in order to successfully market their value proposition

If you'd like to learn more about a unique Digitol Transformation Service - everything you need for a digital upgrade and the tools needed for developing new business with Blue Ocean caliber customers, then click on the link below.

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If you missed the eight-part series you may want to check out my new eBook - just published and containing a thorough examination of the office supplies industry and a path to the $20 billion growth opportunity.

Free e-Book #2 Click Here for Access

 

Topics: Business Transformation, Social Media, Industry News

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