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Do the Copier Manufacturer’s Sales practices rise to the level of “dumping”

March 5, 2009

Have you ever heard a Salesman called a “give away artist”? Or have you been in a deal against a Sales person who “dropped his pants” to get the deal? Do you find yourself scratching your head when your hear what they “sold” (I use the term loosely) the MFD for?

Did you go into this business to starve? I don’t know about you, but I don’t think it is wrong to make an honest profit on the equipment that you sell, especially if you have a history of taking care of your customers. (There is an added value here).

Along come the Direct Sales arm of the manufacturers. Usually with a name that ends with _BS (CBS, RBS, KMBS, TABS, or some other_BS). Is it just me or does it seem that the ONLY thing they have to compete on is price. Why is it that they always seem to be the cheapest? Could it be because one Manufacturer’s Direct Sales Branches lost $42 million dollars last year? It must be nice to have such deep pockets that you can afford to loose $42 million dollars in a year and still stay in business (OK, stop thinking about AIG, CitiBank, etc. we can talk about them another time).

How do you loose $42 million in a year? Could it be by pricing your equipment and service so low that it COSTS YOU MONEY to make the sale? Isn’t that the very definition of “dumping”, predatory pricing designed to buy market share and drive your competition (who actually sells for a profit) out of business? The concept of “dumping” is based on the fact that you can “bleed” longer than your competition. They (the Manufacturer) can afford to Loose money longer than most of your competition (We, as independent dealers are in business to actually make a profit).

It’s not just the guys who lost $42 million last year either. I worked for a different  _BS for a little over two years, and my last year there (right before their big merger with Lanier) we were the only direct _BS branch out of 13 direct _BS branches in the country to hit our “triple crown numbers” for the year. Which means 12 out of 13 didn’t! How do they stay in business? Maybe they just keep buying other companies (Savin, Lanier, Ikon….) to buy their market share. IF they were an Independent business, they would be OUT OF BUSINESS!!!

When I was the Solutions Manager at _BS \ Boston (New England) I brought one of the top sales guys over from my old company (happens all the time in our industry doesn’t it). When he made his first sale, the GSM (General Sales Manager) for the Boston Branch was bragging to the VP who ran all of the direct branches about his first sale and the profit that he made (personally) and for the branch. The Corporate VP (an Accountant type) said to the GSM you need to look at that deal to make sure that he didn’t do anything unethical. UNETHICAL!!! Oh My God! He MADE A PROFIT, Somebody arrest that Salesman, HOW dare he make a profit!!! Who the hell does he think he is!!!! After all doesn’t he understand that we are in business to give the equipment away and he is screwing up our plan by actually making a profit.

This is what happens when you put a “bean counter” in charge of a Sales orginization. How do you put someone in charge of a Sales force who themselves have NEVER sold anything in their life! Am I out of line saying that it is necesary for you to have made a quota and sold for a profit to manage those that do. If you have never done this, it doesn’t make you a bad person, but it does mean that you are not going to be repected by those who have gotten up every morning thinking about their quota and their margin. But maybe I digress…

The Direct Sales Branches of the Manufactures, the _BS organizations seem to give it away. Am I wrong about this? They not only give away the equipment (which is bad enough) but they try to give away the service (if their Service Manager is too weak to stand up to these Give away artist). These are the people who have set the bar at 4.5 cents for an 11×17 color page (Single Click)!!! You Can NOT, repeat NOT even break even, never mind make a profit at that price. So WHY DO THE MANUFACURER’S OFFER IT. In my opinion THEY ARE DUMPING!!! and that is illegal. I will say that our VP of Service (Mike McLaughlin) at NECS will not put up with this, why? Because he knows, and he makes sure that we know, that IF he is going to give the customer the GREAT SERVICE that they are acustom to from NECS that he can not, and he will not do it for this price. We regularly tell customers that if you are looking for the CHEAPEST then you don’t want us (NECS). Because we are not CHEAP, we will give you the best value, but we are not the cheapest.

So, It may be necessary for those of us who actually turn a profit in this business to call to task the direct branches who loose money each and every year. If you can’t do what we do, and make a profit then GET OUT! It doesn’t make you a bad person just unfit to manage a Copier \ MFD organization. You are ruining this business for those of us who can do it and make a profit. And I think that if you can’t make a profit then you are “Dumping” your equipment and your service, and that’s illegal! So Knock it off, you are not helping anyone in the long run.

That’s my $0.02
Vince McHugh
vince.mchugh@necs.biz
WWW.NECS.BIZ

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6 comments

  1. Kudos, hurray, I’ve been stated this for years, profitable dealers are subsidizes “BS” Direct Branches. The only thing we can do as dealers is to keep informing the public of their terrible service, and the high turnover of personel. Sooner or later it’s going to him home somewhere.

    I too think it’s illegal and I wish BTA has the brass balls to step and file law suits against all of the manufacturers. We have quotes, contracts (the internet is a great wealth of information). A member of the P4P summed it up like this “the people who work at the Direct Branches fell that they are owed a living”.

    I would tend to think that the managers at the “BS” branches are weak, mindless and couldn’t sell their way out of paper bag if their life depended upon it, thus they resort to have the lowest price.

    I have in my possesion a sales order to an end user from a “BS” branch that is 28% below the lowest dealer price. Go figure.

    Art


  2. Art,

    Your web site (P4PHotel) is a great wealth of information regarding this topic. Maybe now that Ikon, Danka, and to a lesser degree Global are all out of the way. We can have a real battle for our industry between those who want to give away their products and those of us who have invested in an infrastructure that allows us to give our customers the service & support after the sale that makes them not only customers, but fans!

    History has shown us the epic failure of the big national dealers. Why should anyone think that the Manufacturer’s nation wide (direct) sales force can do any better. I mentioned in a previous blog that it is basically the same people who were running ikon, Danka, & Global that are now running Ricoh, KM, and Xerox (at least in the US). I just heard that the guy who use to run Danka was put in charge off the KMBS direct organization. Let’s hope that he can do for KMBS what he did for Danka 🙂

    Vince


  3. Providing value and a fair price are not mutually exclusive, Vince. The private dealerships like NECS are dinosaurs and should be all but extinct in 5 years. I’ve been on both sides of the fence and what the strong manufacturers bring to the customer in terms of complete imaging solutions and support cannot be equaled by the little private guy. The NECS’s of the world DO NOT have the SE support or product specialists that can make the difference. We may have a better price point for the customer but thats because the aggregate global base install pool allows us to. You would if you could. Sales comp plans weighted to margin instead of revenue create a bad selling proposition to the customer. We sell value as well as provide an aggressive price point. Either NECS does too or they are dead.


    • Hey Manny,

      You guys have been predicting the demise of the Independent Dealer for the last 15 years. But you know who is gone…IKON, DANKA, Global. You know who is still hear The Large Independent Regional Dealerships. The Big National Dealers all failed. They tried to buy market share and ran their companies into the ground (Global being an exception because they allowed their dealers to run their operations locally). Why do you think that the Manufacturers Direct Sales organizations (the _BS dealers) will do any better than IKON or DANKA when it is for the most part the same people running them.

      I know that IKON and now the manufacturers try to paint the Independents as a small operation run out of someone’s garage. NECS is the largest Canon Dealer in New England with a team of Pre & Post Sale Systems Engineers. So you are going to have to find a some new “spin” to tell your customers. But being a part of one of the _BS organizations that shouldn’t be hard to come up with something.


  4. Vince- Focus man. While you were crying here online a manufacturer rep just took 5 more of your accounts. Back to work!


  5. Amen, brother. Our only hope is that some day the manufacturers will require direct operations to make a profit or they are forced to sell off direct operations some legal action.



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