If you asked Tom McMahon of Tom's Photo & Ink in Albuquerque, New Mexico, how his business has been succeeding in today's fickle market, he would tell you that listening to his customers has single-handedly built up his client base. "Open up dialogue by asking open-ended questions," he says in describing his business strategy. When I asked him what types of answers he receives, he said that it varies, depending on the customer and the service they are looking for. However, the single thread that remains consistent throughout McMahon's business is his multiple product and service offerings.
And he's not alone. Because the imaging industry is growing faster and larger than ever before, retailers have had to expand their product and service offerings to encompass broader customer demands. You could say that they've become Renaissance Retailers, fully aware and fundamentally adroit at everything photo- or technology-related.
One such service that retailers have ventured into providing of late has been inkjet cartridge refilling. "First off, the ink is a natural tie-in to my photo customers because many of them think that they can print photos at home, and many have digital cameras," McMahon explains. "Ink has given me another way to entice these customers into my store. It gives me another chance to talk to them about my printing and the services we offer, and it gets them into my store more often."
Indeed, more warm bodies scouring your aisles means more profit for your business. Harry Nicodem, CEO of TonerHead, Inc., which is the manufacturer of the Ink-O-Dem Cartridge Refilling System, says that "offering a cartridge refilling service can create increased foot traffic. When you offer ‘Refill While You Shop,' the customer has five to 10 minutes to shop while they wait for their cartridge to be filled."
Many retailers look at inkjet cartridge refilling with an almost "greater-good mentality"-although recycled cartridges may have a lower "shelf" value, the additional revenue brought in through add-on sales or sales stemming from increased traffic in your store reconciles itself as a lucrative service for retailers.
"Photo retailers will get [the] first chance at selling other products, both in photo and in other departments, as this consumer traffic takes the opportunity to fulfill other needs while in the store," explains Steve Sloan of Academy Corporation. "Of course, this can include the retailer's sale of replacement cartridges for those cases where refill isn't appropriate-a sale that otherwise the photo retailer has very little chance of making. Revenues and profits from inkjet refill and related sales can greatly enhance the profitability, and help to replace photo-related revenues in long-term decline from digital conversion."
According to David Nycz, also from Academy, "Independents have a unique skill set that allows them to participate in this business, which gives them a leg up over larger establishments."
Thus, the opportunity created for the retailer through refilling winds up covering their initial investment by offering a foray into other services that, if sold individually, would have been a tougher sell. "Inkjet refilling is a very profitable response to printer-company competition that has siphoned off photo-related business from stores," says Sloan. "Consumers are using ink to print photos, webpages, emails, and [for] other purposes. Buying OEM replacement ink cartridges is very expensive. Refilling ink cartridges provides consumers with real value, approximately 50% cheaper than purchasing replacement cartridges."
Bill McKenney, CEO of InkTec Zone, concurs: "At 50% savings or more from the price of a new cartridge, it's quite an offering for the consumer," he says. "And it's a terrific profit center, allowing the retailer to realize gross margins of 90% or better."
Allen Luthy, director of retail systems for SME, says that "the value-proposition is a win-win for all. It only costs about $1 worth of ink to refill a $30 inkjet cartridge. Retailers can refill the customer's cartridge and return it while ringing up a $15 sale at 90% margins. Nearly every business and 62% of homes contain at least one inkjet printer."
And, from an environmental perspective, Luthy recognizes that "refilling keeps the cartridge out of the landfill." More than 300 million cartridges are thrown away every year, and some research has shown that in North America alone, more than 40,000 tons of plastic and metal are saved from landfills annually through cartridge recycling (Northwest Recycling Outreach, www.northwestrecyclingoutreach.com). According to the Outreach program, every 100,000 used cartridges recycled saves 9,599 kilograms of aluminum, 40 tons of plastic, and 1,000,000 liters of oil. Cartridges can be refilled three to five times on average, which not only keeps the sizes of those landfills smaller, but also keeps the cost of cartridges lower for customers, creating a profitable, environmentally friendly revenue stream for retailers.
But to enjoy such advantages, retailers must "do their homework first," as SME's Luthy puts it-homework that includes finding the best system that suits your retail needs seamlessly. "Certainly, the retail inkjet market is attractive on so many levels, but anyone can get ink into a cartridge," he says. "When the print quality is substandard relative to the new cartridge, you won't be experiencing the huge profits, increased customer traffic, and 90% margins that other companies claim to achieve."
According to Peter Lecher of STS Refill America, some "machine technology in the recent past was/is not equipped to refill new cartridges that the OEM has put on the market; [therefore], the process of refilling can be quite messy and wasteful, which translates to inefficiency, inferior quality, and lower profits."
Such systems will take more time to operate, dissuading customers who are looking for a quick fix. Research is essential when making any major purchase, and most retailers are aware of the companies that offer the best products.
Nonetheless, as Markus Kunz, CEO of SME, acknowledges, "the key to repeat business in this market is a satisfied customer." Advice that Tom McMahon takes very seriously: "We greet all of our customers by name, we listen to them, and then we try to help them." And what better way to help customers than offering them a cheaper, recyclable, quality service that also expands their own business? Too good to be true, or too true to be that good? You decide.
Why Jump on the Inkjet Refill Bandwagon?
- 300 million cartridges are thrown away every year.
- More than 40,000 tons of plastic and metal are saved from landfills annually through
- Every 100,000 used cartridges recycled saves 9,599 kilograms of aluminum, 40 tons of plastic, and 1,000,000 liters of oil.
- Cartridges can be refilled three to five times, on average.
- It only costs about $1 worth of ink to refill a $30 inkjet cartridge.
- At 50% savings or more off of the price of a new cartridge, retailers can realize gross margins of 90% or better.