Survey Compares Customers of Different Selling Channels
- By Craig Berosh
- Oct 01, 2005
More remanufactured and compatible printer cartridges than ever are being sold
through a third-party. That is to say more aftermarket cartridges are being sold
by someone other than the manufacturer of the cartridges. Superstores, Web sites,
contract stationers, wholesalers, resellers and other remanufacturers are all
part of the maturing reselling channel. Conversely, it is believed fewer companies
are remanufacturing and selling their own product directly to the end user than
in the past.
According to Recharger Magazine’s annual Customer Profile Survey,
the split is nearly right down the middle, allowing for the perfect chance to
compare the customers of each of these selling channels. Half of survey respondent’s
sales are to end users and half are to resellers, but this only tells half the
story.
Respondents who sell to end users exclusively produce hundreds or thousands of
cartridges monthly. Respondents selling through resale solely, in comparison,
produce tens or hundreds of thousands of cartridges each month. So, despite end-user-selling
remanufacturers outnumbering reseller producers, it’s safe to estimate the
number of remanufactured cartridges sold by a third-party in today’s marketplace
to be between 55 to 70 percent of all aftermarket cartridges sold worldwide.
The Customer Profile Survey was also conducted in 2003 and 2004, and, when
useful, comparisons to past surveys will be made. The survey, in conjunction
with input from Recharger Magazine’s Editorial Perspectives
Committee,
was conducted in an effort to identify the customers of aftermarket printer
cartridges and discuss any issues involved with the results.
1) What percentage of your sales is to end users? What percentage is to
resellers?
As mentioned in the opening, half (50 percent) of respondents’ sales are
to end users and half are to resellers. See Figure 1.
Figure 1. Respondents are evenly divided in their sales to end users and resellers, which provides the ideal opportunity to compare the customers of the two selling channels.
This almost even split (actually 50.4 percent to end users/49.6 percent to resellers)
provides an opportunity to compare the two or, more accurately, three selling
channels. So, though out this analysis, when appropriate, companies selling to
end users only will be compared to companies selling exclusively to resellers,
as well as to companies selling through both channels.
For the purposes of this comparison, here’s a clearer definition of the
three categories of respondents. 1) Respondents who indicated their sales are
100 percent to end users will hereafter be called end-user sellers. This
group makes up 20 percent of all respondents. 2) Respondents who indicated their
sales are 100 percent to resellers will be referred to reseller producers.
This group makes up 28 percent of all respondents. 3) Respondents who indicated
their sales are both through resale and retail will be referred to as dual
sellers. This group makes up 52 percent of respondents. Sales for dual sellers
are 59 percent to end users and 41 percent to resellers.
2) Indicate the number of your company’s active customers, laser printers
in your customer base, and inkjet printers in your customer base.
On average, respondents have 1,257 active customers, and 7,176 laser printers
and/or 8,056 inkjet printers in their customer base. See Figure 2.
Figure 2. Respondents’ average number of active customers, laser printers in customer base and inkjet printers in customer base.
The results to all three of these questions significantly increased from past
Customer Profile Surveys. When the median results for these questions are used,
perhaps a more accurate picture is revealed. The median results are 200 active
customers, and 295 laser and/or 300 inkjet printers. It’s quite a difference,
and highlights the divide between the big-business and local small-shop respondents.
The dual-sellers group (respondents who sell to both end users and resellers)
have the most active customers of the three selling channels averaging 1,565 (250
median). The end-user sellers average 1,147 (200 median) active customers and
reseller producers average 771 (169 median).
As for the number of laser printers in respondents’ customer bases, end-user
sellers average 10,363 (295 median), and dual sellers average 6,318 (180 median).
Lastly, end-user sellers average 8,708 (200 median) inkjet printers in their customer
base, and dual sellers average 7,774 (200 median) inkjet printers.
3) Indicate the top three categories of customers your company services
in terms of total sales volume.
With a large number of respondents selling either partly (dual-seller respondents)
or wholly (reseller producers) through the resale channel, it’s not surprising
the top customer category for respondents is cartridge wholesalers/resellers.
Respondents were provided nine customer categories and asked to select the top
three for their business in terms of total sales volume. Twenty percent of respondents
indicated the cartridge wholesalers/resellers category was among their top three.
The next most-indicated customer group is residential consumers, indicated by
12 percent of respondents, followed by government agencies (11 percent), accounting
firms (10 percent), and financial/banking businesses (9 percent). Completing the
choices listed with the question are law offices (8 percent), schools (6 percent),
medical/dental/hospitals (6 percent), insurance offices (6 percent), and engineering
firms (2 percent). See Figure 3.
Figure 3. Who are your customers? One-fifth of respondents sell at least partially through the reseller channel, including sales to other remanufacturers. For end-user sellers, residential customers increased the most from past surveys.
Ten percent of respondents provided an “other” answer than the choices
provided with the question including specific reseller channels such as “refillers
and remanufacturers,” “distributors and importers,” “OEMs,”
and “Web sites.” “Police,” “general businesses,”
“manufacturing,” “pharmacies,” and “newspapers”
were the other end-user customers indicated by respondents.
The biggest difference in the results to this question compared to past Customer
Profile Surveys is the increase in respondents in the cartridge wholesalers/resellers
category (20 percent). In 2004, the cartridge wholesalers/resellers category was
10 percent, and in 2003 5 percent. Other categories on the rise from past surveys
are residential customers (12 percent, up from 8 percent last year), and the government
and financial/banking categories, both of which increased 3 percent from 2004.
Categories that decreased the most from past surveys include accounting firms
(10 percent, down from 19 percent last year) and schools (6 percent from 12 percent).
The impact that electronic tax filing and other paperless initiatives have had
on certain business sectors is one of the topics discussed by Recharger’s
Editorial Perspectives Committee.
As for end-user sellers, 15 percent of sales are to residential customers, followed
by accounting firms, financial/banking, and medical/dental/hospitals, at 13 percent,
respectively, and 11 percent to law offices.
For reseller producers, obviously, the cartridge wholesalers/resellers category
is the No. 1 category, followed the “other” category, in which several
respondents pinpointed other remanufacturers and refillers as being their customers.
The wholesalers/resellers category is also the biggest customer for dual sellers,
indicated by 19 percent of this group, followed by residential customers (13 percent)
and government agencies (13 percent).
4) What percentage of your company’s total revenue is derived from
different end-user customers?
Obviously, this question excludes the reseller producers group as they don’t
sell to end users. As for respondents whose sales are in part or entirely to end-user
customers, revenue from small-office customers, defined on the survey as customers
with 1-4 printers, makes up the largest percentage of respondents’ total
revenue at 25 percent.
The next largest percentage of sales for respondents comes from residential customers,
making up 19 percent of total revenue. When combined, revenue from small-office
and residential customers makes up 44 percent of sales for respondents, which
is another way of saying sales to the SOHO market. Respondents’ revenue generated
from residential customers also represents the biggest increase from past surveys.
See Figure 4.
Figure 4. Respondents’ revenue from end-user customers. Again, revenue
from residential customers increased the most from past surveys.
Completing the choices provided on the survey, medium offices, defined as customers
with 5-15 printers, accounts for 17 percent of respondents’ total revenue,
followed by major corporations (16 percent), government agencies (12 percent),
and large offices, defined as customers with 16-30 printers, at 10 percent.
5) How often do your customers place an order?
Thirty-seven percent of respondents’ customers place an order more than once
a month and 34 percent of respondents’ customers place an order monthly,
the two most indicated choices provided on the survey. Furthermore, these two
choices increased the most from past surveys, emphasizing the importance of a
company’s distribution capabilities in today’s marketplace. See Figure
5.
Figure 5. Frequency of customers’ orders. Respondents indicated customers are
ordering more during a monthly timeframe than in past surveys, which emphasizes
a company’s distribution capabilities.
Completing the list, 19 percent of respondents’ customers place an order
quarterly, 7 percent twice a year, and 3 percent annually.
As for the end-user sellers versus reseller producers, the results are the following.
For end-user sellers, 22 percent of customers place an order more than once a
month, 33 percent monthly, 29 percent quarterly, 10 percent twice a year, and
5 percent annually.
Forty-seven percent of reseller producers’ customers place an order more
than once a month, 35 percent monthly, 14 percent quarterly, 3 percent twice a
year, and less than one percent annually.
6) What percentage of your end-user customers previously used OEM and aftermarket
cartridges?
Fifty-nine percent of respondents’ customers previously used OEM cartridges
and 41 percent previously used aftermarket cartridges. See Figure 6. Again, reseller
producers are omitted from this question.
Figure 6. Percentages of respondents’ customers
who previously used aftermarket and OEM
cartridges.
The percentage of respondents whose customers previously used OEM cartridges is
a decrease from past surveys. In 2004, 62 percent of customers previously used
OEM and 37 percent used aftermarket, and in 2003 the ratio was 61 to 39 percent.
While the results speak directly to the aftermarket’s market-share gain against
the OEMs, and, ideally, an increase in OEM market captured is desired, the results
could also be interpreted in other ways. It could be argued, for instance, that
end-user customers had a good experience with an aftermarket product and simply
tried another seller.
7) What products and services do your new customers choose as part of their
first order?
According to respondents, 40 percent of new customers’ first orders were
remanufactured laser cartridges, the most of the choices provided on the survey.
Respondents were given seven specific products and services and asked what percentage
of new customers chose each as part of their first order.
Remanufactured inkjet cartridges (26 percent) and OEM inkjets (11 percent) were
the next most indicated by respondents, followed by OEM laser cartridges (8 percent),
other supplies (8 percent), printer service (4 percent) and equipment (2 percent).
Remanufactured and OEM inkjets increased the most from previous surveys, which
may simply be an indication of more inkjet refillers and sellers taking part in
this year’s survey. See Figure 7.
Figure 7. Products and services new customers choose as part of their first order.
8) How do you deliver your products?
Seventy percent of respondents use a parcel service such as FedEx or DHL to delivery
their products, the most of the three delivery methods provided on the survey.
See Figure 8.
Figure 8. Methods of delivery. The majority of respondents use a parcel
service to deliver product to customers.
Forty-six percent of respondents do their own delivery and 36 percent have walk-in
customers. Nineteen percent of respondents provided an “other” delivery
method including several mostly likely used by international reseller producers
such as “brokers,” “forwarders or external forwarders,” and
“logistics by sea or air freight.” More “other” answers include
the “post office,” “USPS priority mail,” and for one literal
respondent, “pallets.” Overall, 50 percent of respondents deliver product
by more than one method.
As might be expected, end-user sellers do their own delivery (71 percent) and
rely on walk-in business (52 percent) more. Conversely, reseller producers (92
percent) and dual sellers (82) deliver more by parcel and other logistics services.
9) How do the majority of your customers pay?
For 64 percent of respondents, the majority of their customers pay by invoice
or bill. Eighteen percent indicated the majority of customers pay in cash, 11
percent have their account credited, and 7 percent pay by an “other”
method including “telegraphic transfer (TT),” “letters of credit
(LC),” and “wire transfer,” most likely for international companies
in the reseller producers group, as well as by “check” and “credit
card.”
Figure 9. How customers pay.
This article originally appeared in the October 2005 issue of Recharger.