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Ricoh buys IKON – What does that mean to you?

October 19, 2008

The news that Ricoh is buying IKON shocked the industry. While the deal has not yet been inked it does seem to be all but done. Many of us lived through the period of time where the big national dealers where buying up independent dealers at an alarming rate. But who among us thought we would see the day when IKON would be bought up like so many of the dealerships they consumed, and yet here we are. Oh how the mighty have fallen!

The Copier \ MFP industry is in a time of flux. With Konica Minolta buying Danka, Xerox buying Global, and Ricoh buying IKON all of the nation wide independent distribution channels have been absorbed by the manufacturers. Some people believe that bigger is always better. Having worked for a direct sales arm of a manufacturer and now currently for a large independent dealer I have a different opinion.

So far, the Manufacturers’s direct branches have not been good at turning a profit. When I left the direct branch of one manufacturer a year ago, we were the only direct branch out of thirteen in the country to hit our “triple crown numbers” and that direct branch had never before done it. One manufacturer (that I now represent) lost over 40 million dollars on their direct sales & service organization last year. Why, IMO because the don’t sell value. They give away the equipment and then try to scrimp on service to make up for it. The customer, who thought that they were getting a “great deal” suffers in the end.

There is a very different mind set from the Manufacturer and an Independent dealer. The Manufacturer sells toner (supplies) and the sale of equipment is simply a means to capture the supply market. So giving away the product seems like a reasonable strategy (Printer manufacturers have been doing this for years).
The independent dealer, on the other hand, is focused on long term sales AND SERVICE relationships to stay in business. Direct Sales organizations are looking to please their stock holders, Independent dealers need to please their customers.

When you find a large independent dealer who has survived years of pressure from Ikon, Danka, and Global, a dealer who has neither sold out nor been driven out of business by these national chains, a dealer who has outlasted all three and is still servicing and selling to a loyal customer base, that is dealer who you want to do business with. They could not have survived and thrived without doing a lot of things right.

In closing I would like to address the temptation of a customer who likes the idea of buying from a manufacturer BECAUSE they give their product away. While I acknowledge that there is a short term win for you, the end user, I ask you to consider a few things.  Is it wrong to make an honest profit? Are you entitled to make an honest profit on the products your company sells? That aside consider what happens to a market when only the big chains are left, competition dries up and prices rise and services suffers. I submit to you that it is the independent dealers that have and will keep this industry customer focused. If you have not dealt with an independent dealer in the past, and your current or previous dealer was either Ikon, Danka, or Global then give a call to the large independent dealer in your area that services your current line of Copiers \ MFPs. I think you will like what you find.

That’s my $0.02
Vince McHugh
VP \ Network Solutions
vince.mchugh@Yahoo.com

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