My friend has a small office supplies store. In our small town her shop is the only place for a number of things and definitely the only single store for all office supply needs.
She sells printers, All-In-Ones and Fax machines. Even though she limits her in-store machine stock to one brand (inventory is costly and space is limited) she tries to carry all the major ink brands because that’s what her customers need. And one of the steady sellers is Ink.
But this year something has been happening in this part of her business that is negatively impacting it. It has to do with changes in the relationship that the big manufacturers want to have with the companies in their distribution channel.
First one of the major printer companies, Epson, changed their rules on who can sell their Ink. If your store doesn’t sell at least $10,000 of their ink per year then they don’t want you selling their ink. So now locals cannot buy ink for their Epson machines from her.
Next it was Hewlett-Packard.
They want to ensure that whoever sells their ink meets HP’s requirements in regards to being reputable, professional and knowledgeable. Ostensibly so that the end users won’t associate HP with negative experiences they might have with shoddy sales outlets.
In order to meet those requirements HP wants all those re-sellers to sign up for their partnership program so that HP can vet them and pass judgement on them. And if they are found to be lacking then they will no longer be allowed to sell HP Ink.
At this point some of you will be thinking there is nothing wrong with this, that these companies are just protecting their brand and customers. That this is a move in the right direction, towards better experiences for those end users and better service behavior on the part of the re-sellers.
Unfortunately, this is not the case in every situation and my town and my friend’s experience show this.
Let’s look at market size first.
Most of you likely live in an urban area with very many people and places to shop. That’s good for you but it’s not where everyone lives and it certainly doesn’t describe our town.
Our town has less than 5,000 people in town and maybe as much as 10,000 people in the economic catchment area. The next largest city is about an hour of mountain driving away on one direction and over 2 hours away in the other direction.
How many Ink Jet printers do you think there are here in this market? And of that how many are Epsons? Enough to sell $10,000+ of Ink? Especially now that Epson is selling printers with large refillable tanks that don’t need the user to shop for more all that often?
In our town there are 3 large mainly grocery stores that also sell some items that aren’t food. One of them is talking about selling Printer Ink again – it’s a line of products that they have gone away from and are now returning to in the past decade.
Put another way, if they were the only source in town then for years we would have had to order it from out of town or travel out of town to get it. Now that they have it again we can buy from them without leaving town. Not all brands of course. And of course the sales people are grocery clerks . . . so, sorry HP, but printer ink is not really a product they have a lot of knowledge about. Hopefully your customers will be happy with that . . .
But of course the grocery store is Not the only, or best, source for printer ink. We have The Source and my friend’s store. Oops – The Source store USED TO sell printer ink but does not at this time.
That leaves my friend’s store. She’s been selling Printer Ink and Toner since she bought the store 16 years ago. All the brands she can get. She stocks the items she’s come to know are regularly needed by her customers because she sees her customers face-to-face every day. And she’s savvy enough to help those who can’t remember which ink they need as long as they know which printer they have. It’s a small town and marketplace so sooner or later everyone meets everyone else and the quality of service you give gets known.
If you’re new to town and need office or art supplies and ask around people will refer you to her store. And talking to someone face-to-face who provides knowledgeable and friendly service, in a well-stocked store, is far superior to an online shopping experience. Because it’s a small town and almost all of the business is face-to-face she’s never had the need of a website.
Apparently one of the criteria that HP needs a Partner to meet is to have a website. And not just a page on someone else’s site, nope. A website with a name and URL that reflect the company identity and a contact email that also references a real email and not some freebie one you can get anytime.
You see, from HP’s point of view, in today’s world a business must have a website in order to be taken seriously. Put another way, if you’re too small to have (or need) a website then you’re not a serious business, you’re not their kind of business.
From Epson’s point of view you’re not a serious business if you don’t sell enough of their product.
If you are a small business owner you’re either laughing or crying or scowling now. If you’re not a small business owner, then let me enlighten you as to whether or not small businesses are ‘serious’.
My friend’s business has one employee – her. If she needs to leave for a short while for any reason the store closes for a short while. If she needs to miss a day she has a friend that can mind the store for a day or two. When that happens she pays for the help of course. But that’s time when her store is running in a reduced capability (this friend doesn’t know how to do everything) and is costing her money.
That is the reality of a small business in a small marketplace. There’s enough business to justify one paycheque but not a second.
And to make that paycheque she runs the till so people can pay for their purchases. She also helps those who aren’t sure what they want. And does photo copying for those who don’t know how to do it themselves. And runs print jobs people bring in on flash drives or send to her by email. She is her own Shipper / Receiver, Inventory controller, price tagger and shelf stocker. She minds her stock levels and orders new stock from whichever of her suppliers has it. Or finds it elsewhere if possible – at least she searches. She has to do her own Invoicing / Billing and Bill Payment. Cashing out the till, tallying the money and cheques and doing Bank Deposits. Opening / Closing / Cleaning / Recycling – these are her jobs as well. And every month it seems like Month-End has come too soon.
Some of that she can do while the store is Open to the public – but always the customers need to come first. The rest happens before the doors open or after they close for hours into the evening. And sometimes for hours on our kitchen table.
This is the life of the small business retailer. It’s hard work, long hours and not as enriching as you’d think.
Add to this the customers who tell you to your face that they can get it cheaper at [pick a big name store] or across the border, when often you know that’s just not true. Suppliers who pressure you to be more prompt with payments not because you’ve done anything different but because they have had to tighten up their accounting. Or Suppliers who go out of business forcing a search for replacement sources. Or get bought by incompetents also forcing a replacement need.
With all of that on the small retailer’s plate why would they go to the added expense and work of creating and maintaining a website? It wouldn’t be for customers they see in their store on a daily basis, nope. Those people come in and can see and touch the products and ask the proprietor questions directly.
It would be for people they almost never see personally.
But that would put my friend in a competition with the biggest names in the world who have the best prices and distribution systems. (think Amazon)
ANY sales generated by this website, and it’s not likely that that many would happen – but I digress, anything sold would then have to be shipped out to the buyer. Meaning the website would add NEW ROLES to the ones that the small business owner already has: Order Picker / Fulfillment and Shipper.
It’s a lot of expense and effort for a questionable amount of new sales and profits. If you were in my friend’s position would you do that?
If you had to pay someone to build and maintain your website, that’s an added expense. If you knew how to create your own website would you really be saving all that much? You’d still have to do the job and then keep on top of it so it doesn’t get hacked and put your customers, and you, in jeopardy.
IF you tried actually selling online the site becomes much more complex and in need of much more effort and expense. Product changes, pricing updates, order systems maintenance – these cannot happen on their own. When would you find the time?
Then there’s Manufacturers who pressure Suppliers who pressure and cajole you not because you’ve done anything different but because they have gone through changes.
Did I mention the fact that my friend does not buy her ink directly from HP or Epson? No, she has wholesale suppliers who do that. HP and Epson have the power to pressure those suppliers to pressure their customers, my friend, to perform / conform or be dropped.
Well that may drive the online sales up for them but it drives the local, small town, businesses down.
And it’s also good to remember where the real profit stream is for the printer marketplace. It’s the Ink, not the machines, that big manufacturers see most of the money flow from.
Too bad that translates into Red Ink in the accounts of small businesses. But then there’s no Red in CMYK . . . magically though there is Green.
UPDATE: After posting this I did some research and found that I should be more clear in my wordage. HP is no longer just HP . . . as of Nov 2015 it split into two companies: Hewlett Packard Enterprise and HP Inc.
HP Inc. is the company that this post is about. They make Printers and PCs.
On a more personal note, I first ‘met’ and was impressed with HP 40 years ago but that part of the behemoth that HP became was split off into another company, Agilent, back in 2002. More information on the recent breakup can be found in this Fortune article from Oct 2015.