USA Marking Supplies Distribution Trends
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1 97 Libbey Industrial Parkway Suite 300 Weymouth, MA Phone: Fax: USA Marking Supplies Distribution Trends John Shane Director January InfoTrends/CAP Ventures 1
2 USA Supply Groups $M at Retail Pricing $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ Copier Toner Seg. 2-6 Copier Toner & OPC Seg. Per. & 1 Copier PCs Segments 2-6 Color Copier Toner PC Laser Fax Cartridges Printer Cartridges 0-79 ppm 80+ppm Laser Printer Toner 80+ppm Laser Printer PCs Workgroup Color Laser Supplies Production Color Laser Supplies Desktop Inkjet Cartridges TT Fax Ribbons Color Thermal InfoTrends/CAP Ventures 2
3 USA Major Supplies Distribution Channels Contract Stationer An office supply dealer who works largely with medium and large companies selling a full range of office supplies. Contract Stationers do not have stores. Small BPIA IP Specialist BTA Printer Dealers Office Superstores Computer Superstore Smaller stores that fit the profile for membership in the Business Products Industry Association (formerly NOPA). These are commonly called stationery stores. Also called computer supply dealers, these are similar to contract stationers but have expertise in and sell primarily computer and printer supplies to MIS departments. They do not have stores. Dealers that fit the profile for membership in the Business Technology Association (formerly NOMDA). These are hardware dealers focused primarily on copiers and fax machines, but they often try to work in the printer area as well. They supply hardware, services, and supplies. Commonly called the COMDEX channel. These dealers sell computers, networks, software, and printers. Retail stores focused on office supplies, hardware, software, and furniture. Examples of office superstores include Staples, Office Depot, and OfficeMax. Large retail stores selling primarily computers, printers, other computer hardware, software, and supplies. These are quickly starting to look like consumer electronics stores InfoTrends/CAP Ventures 3
4 USA Major Supplies Distribution Channels Warehouse Clubs Direct Mail Catalogs Hardware Vendor Direct Other Consumer Retailer Internet Specialist Other Channels Large membership stores that focus on selling items in bulk. They sell a wide range of items, many of which are completely unrelated to office supplies. Catalog operations which sell office and computer/printer supplies. Examples include Vision and Reliable. Hardware vendors selling directly to users. In the past the vast majority of this activity was when the vendor sells, services, and supplies its customers directly, but it also includes telemarketing operations, 800 number sales, and Internet sales. This includes all types of other consumer retail stores, such as mass merchandisers, discount stores, consumer electronics stores, drug stores, and grocery stores. These are a group of companies that grew out of the Internet boom and sell only over the Internet. This channel does not include Internet sales associated with a pre-existing business such as contract stationers or office superstores that also take orders over the Internet. Amazon.com is an example of an Internet specialist. This is a catch-all category for channels that do not fall under those listed above. A large share of these channels are aftermarket supplies manufacturers selling directly to users, including cartridge rechargers selling direct. Also included are independent service organizations that do not fit the BTA or Printer Dealer groups InfoTrends/CAP Ventures 4
5 USA Distribution Channels Sales of Marking Supplies $M at Retail Value $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3, $2,000 $1,000 $- Contract Stationer Small BPIA IP Specialist BTA Printer Dealers Office Superstores Computer Superstore Warehouse Clubs Direct Mail Catalogs Hardware Vendor Direct Other Consumer Retailer Internet Specialist Other Channels InfoTrends/CAP Ventures 5
6 Key Trends Impacting Distribution Shares Color laser becoming less expensive, moves into new channels Dell market share growth and direct sales strategy impacts all channels Other consumer retail inkjet growth Store brand supplies InfoTrends/CAP Ventures 6
7 USA Copier Cartridges Segments Personal and 1 Percent of Value at Retail Pricing 100% 80% 60% 40% 20% Other Channels Internet Specialist Other Consumer Retailer Direct Mail Catalogs Warehouse Clubs Computer Superstore Office Superstores BTA IP Specialist Small BPIA Contract Stationer 0% InfoTrends/CAP Ventures 7
8 USA Copier Toner Segments 2-6 Percent of Value at Retail Value 100% 80% 60% 40% Other Channels Internet Specialist Hardware Vendor Direct Direct Mail Catalogs Warehouse Clubs Office Superstores BTA IP Specialist Small BPIA Contract Stationer 20% 0% InfoTrends/CAP Ventures 8
9 USA Copier Photoreceptors Segments 2-6 Percent of Value at Retail Value 100% 90% 80% 70% 60% 50% 40% 30% Other Channels Internet Specialist Hardware Vendor Direct Office Superstores BTA Contract Stationer 20% 10% 0% InfoTrends/CAP Ventures 9
10 USA Color Copier Marking Supplies Percent of Retail Value 100% 90% 80% 70% 60% 50% 40% Other Channels Hardware Vendor Direct Office Superstores BTA Contract Stationer 30% 20% 10% 0% InfoTrends/CAP Ventures 10
11 USA Laser Fax Cartridges Percent of Retail Pricing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Direct Mail Catalogs Warehouse Clubs Computer Superstore Office Superstores BTA IP Specialist Small BPIA Contract Stationer 0% InfoTrends/CAP Ventures 11
12 USA Monochrome Laser Cartridges 0-79ppm Percent of Retail Value 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Direct Mail Catalogs Warehouse Clubs Computer Superstore Office Superstores Printer Dealers BTA IP Specialist Small BPIA Contract Stationer 0% InfoTrends/CAP Ventures 12
13 USA Monochrome Laser Toner 80+ ppm Percent of Retail Value 100% 90% 80% 70% 60% 50% 40% 30% Other Channels Hardware Vendor Direct Forms MFR/Dist. Direct Mail Catalogs IP Specialist Contract Stationer 20% 10% 0% InfoTrends/CAP Ventures 13
14 USA Monochrome 80+ ppm Photoreceptors $M at Retail Value 100% 90% 80% 70% 60% 50% 40% Other Channels Hardware Vendor Direct 30% 20% 10% 0% InfoTrends/CAP Ventures 14
15 USA Workgroup Color Laser Cartridges Percent of Retail Value 100% 80% 60% 40% 20% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Direct Mail Catalogs Computer Superstore Office Superstores Printer Dealers IP Specialist Contract Stationer 0% InfoTrends/CAP Ventures 15
16 USA Production Color Laser Markeing Supplies Percent of Retail Value 100% 90% 80% 70% 60% 50% 40% 30% Other Channels Hardware Vendor Direct Forms MFR/Dist. Direct Mail Catalogs IP Specialist Contract Stationer 20% 10% 0% InfoTrends/CAP Ventures 16
17 USA Desktop Inkjet Cartridges Percent of Retail Value 100% 80% 60% 40% 20% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Direct Mail Catalogs Warehouse Clubs Computer Superstore Office Superstores IP Specialist Small BPIA Contract Stationer 0% InfoTrends/CAP Ventures 17
18 USA Thermal Transfer Fax Ribbons Percent of Retail Value 100% 90% 80% 70% 60% 50% 40% 30% 20% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Direct Mail Catalogs Warehouse Clubs Office Superstores BTA Small BPIA Contract Stationer 10% 0% InfoTrends/CAP Ventures 18
19 USA Distribution Channel Share of Marking Supplies $M at Reail Value 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Other Channels Internet Specialist Other Consumer Retailer Hardware Vendor Direct Forms MFR/Dist. Direct Mail Catalogs Warehouse Clubs Computer Superstore Office Superstores Printer Dealers BTA IP Specialist Small BPIA Contract Stationer 0% InfoTrends/CAP Ventures 19
20 USA Contract Stationer Sales of Marking Supplies $M at Retail Value $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Color Thermal TT Fax Ribbons Impact Ribbons Desktop Inkjet Cartridges Production Color Laser Supplies Workgroup Color Laser Supplies 80+ppm Laser Printer Toner Printer Cartridges 0-79 ppm Laser Fax Cartridges Color Copier Toner PC Copier PCs Segments 2-6 Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $ InfoTrends/CAP Ventures 20
21 USA IP Specialist Sales of Marking Supplies $M at Retail Value $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 Impact Ribbons Desktop Inkjet Cartridges Production Color Laser Supplies Workgroup Color Laser Supplies 80+ppm Laser Printer Toner Printer Cartridges 0-79 ppm Laser Fax Cartridges Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $500 $ InfoTrends/CAP Ventures 21
22 USA BTA Type Dealer Sales of Marking Supplies $M at Retail Value $2,500 $2,000 $1,500 $1,000 TT Fax Ribbons Printer Cartridges 0-79 ppm Laser Fax Cartridges Color Copier Toner PC Copier PCs Segments 2-6 Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $500 $ InfoTrends/CAP Ventures 22
23 USA Office Supply Superstores Sales of Marking Supplies $M at Retail Pricing $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Color Thermal TT Fax Ribbons Impact Ribbons Desktop Inkjet Cartridges Workgroup Color Laser Supplies Printer Cartridges 0-79 ppm Laser Fax Cartridges Color Copier Toner PC Copier PCs Segments 2-6 Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $ InfoTrends/CAP Ventures 23
24 USA Computer Superstore Sales of Marking Supplies $M at Retail Value $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 Color Thermal Impact Ribbons Desktop Inkjet Cartridges Workgroup Color Laser Supplies Printer Cartridges 0-79 ppm Laser Fax Cartridges Copier Toner & OPC Seg. Per. & 1 $400 $200 $ InfoTrends/CAP Ventures 24
25 USA Hardware Vendor Direct Sales of Marking Supplies $M at Retail Pricing $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Color Thermal TT Fax Ribbons Impact Ribbons Desktop Inkjet Cartridges Production Color Laser Supplies Workgroup Color Laser Supplies 80+ppm Laser Printer PCs 80+ppm Laser Printer Toner Printer Cartridges 0-79 ppm Laser Fax Cartridges Color Copier Toner PC Copier PCs Segments 2-6 Copier Toner Seg. 2-6 $ InfoTrends/CAP Ventures 25
26 USA Other Consumer Retail Channels Sales of Marking Supplies $M at Retail Pricing $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 Color Thermal TT Fax Ribbons Impact Ribbons Desktop Inkjet Cartridges Workgroup Color Laser Supplies Printer Cartridges 0-79 ppm Laser Fax Cartridges Copier Toner & OPC Seg. Per. & 1 $500 $ InfoTrends/CAP Ventures 26
27 USA Internet Specialist Sales of Marking Supplies $M at Retail Pricing $2,500 $2,000 $1,500 $1,000 $500 Color Thermal TT Fax Ribbons Desktop Inkjet Cartridges Workgroup Color Laser Supplies Printer Cartridges 0-79 ppm Laser Fax Cartridges Copier PCs Segments 2-6 Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $ InfoTrends/CAP Ventures 27
28 USA Other Channels (Mainly Remanufacturer Direct) Sales of Marking Supplies $M at Retail Pricing $2,500 $2,000 $1,500 $1,000 $500 TT Fax Ribbons Impact Ribbons Desktop Inkjet Cartridges Production Color Laser Supplies Workgroup Color Laser Supplies 80+ppm Laser Printer PCs 80+ppm Laser Printer Toner Printer Cartridges 0-79 ppm Laser Fax Cartridges Color Copier Toner PC Copier PCs Segments 2-6 Copier Toner & OPC Seg. Per. & 1 Copier Toner Seg. 2-6 $ InfoTrends/CAP Ventures 28
29 Growth of House Brand Imaging Supplies Today Future? Market Share OEM House Brands?? Traditional Aftermarket? Time InfoTrends/CAP Ventures 29
30 Impact of House Brands on OEM Brand share shifts Margin pressure Reseller taking more customer control Changing OEM/reseller relationships Potential weakening of OEM brand New product design and development cycle Potential changes in annuities business model InfoTrends/CAP Ventures 30
31 Impact of House Brands on Aftermarket Industry From branded product supplier to outsourced manufacturer Weakening/elimination of aftermarket brand New competitors without burden of brand management Difficult to have uniform product line and positioning Continued product development and intellectual property responsibility Reseller taking more customer control Tightening of margins with potential for higher volume No Name Recycler InfoTrends/CAP Ventures 31
32 Impact of House Brands on Channel Opportunity for higher margins Potential to increase store/brand loyalty Greater power over suppliers OEMs Aftermarket suppliers Greater product responsibility (i.e. sourcing, packaging, pricing, marketing, service, quality, and liability) Superstores, Contract Stationers, Mass Merchants, Others InfoTrends/CAP Ventures 32
33 Where do you purchase the majority of your inkjet cartridges? 38. From which source do you purchase the majority of inkjet cartridges for your inkjet printers? By source, we mean the organization or reseller that sells it to you not the brand. Other Internet Other Store ebay Circuit City PrintPal CompUSA 123 Inkjets Target Sam's Club Misc Wal-Mart Costco Staples OEM Direct on-line purchase Best Buy Office Max Office Depot InfoTrends/CAP Ventures 33
34 Trust the brand of Inkjet Cartridge to perform as promised 36. How much would you trust each of the following inkjet ink cartridges to perform as promised? OEM Store Aftermarket Hewlett Packard Brand Canon Brand Dell Brand Epson Brand Xerox Brand Lexmark Brand Brother Brand Office Depot Brand Staples Brand OfficeMax Brand Best Buy Brand CompUSA Brand NCR Brand Radio Shack Brand Costco Brand Sam's Club Brand Wal-Mart Brand Nu-kote Brand Quill Brand Dataproducts Brand Corporate Express or Cartridge World Brand Major pharmacy store Major grocery store N= InfoTrends/CAP Ventures 34
35 USA Distribution Channel Trends Contract stationer, IP Specialists, BTA are seeing a flat market Other Consumer retail channels growing share of inkjet cartridges Office Superstore strength in store brand monochrome laser toner and inkjet cartridges and growing share of color laser cartridges Dell is disrupting all of the channels InfoTrends/CAP Ventures 35
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