It’s no secret that the print industry has endured major changes as it has matured, and the last few years have been no exception. As the industry consolidates, the number of major players in the game continues to shrink. Dell exited the print business entirely in 2018, and Samsung’s print business was acquired by HP in 2017. Funai Electric acquired Lexmark’s inkjet business in 2013, then scooped up Kodak’s in 2015. Both brands have effectively left the inkjet market in the US, with just a few choice supplies and Kodak printers left at retailers.

Concurrent to these aquisitions and market exits, the remaining industry players have been faced with the challenge of maintaining profitability from supplies sales - the “bread and butter” of their business. In addition to print's continued state of decline in developed regions and slowing sales in developing regions, manufacturers have to compete with non-OEMs that offer aftermarket replacements for printer supplies with discounts of up to 80%-90% off of the OEM’s pricing (see my previous blog on this topic).

Filling the gap with Automatic Replenishment

So what are current OEM print players doing to mitigate all of these challenges?  One strategy in play is to target the gap between contractual and transactional spaces. As OEMs struggle to maintain supplies market share in an increasingly price-sensitive environment, many are focusing more on supplies replenishment programs. A number of manufacturers have rolled out subscription-based programs, which are increasingly available through reseller partners. HP pioneered this space with its Instant Ink program, which is easily the most publicized and well-known supplies replenishment program in the US home printing market (and it’s also offered in 17 other countries). Instant Ink is currently the only page-quota based subscription service available to customers that purchase their printers transactionally, either from a reseller or from HP directly. Cost savings, convenience, and environmental impact are the main value propositions for end users, while HP reaps the benefits of secure monthly supplies revenue from subscribers.

Replenishment Logos for Canon, Brother, Epson, and HP

Other home printer manufacturers that offer their own smart supplies monitoring software include Brother, Canon, and Epson. All three of these OEMs feature automatic supplies replenishment, but their programs are more “transactional” in the sense that customers pay the retail price (sometimes with a 10% discount) for their ink supplies, which are then shipped automatically to the end user. While these other OEMs offer an additional layer of convenience for customers, they do not challenge the retail system the in the way the HP does. Unlike its competitors, HP’s Instant Ink program more closely adheres to a traditional “contractual” sales model where the customer doesn’t actually own the product and is instead effectively leasing it from the dealer. In the case of Instant Ink, HP plays the roles of both the manufacturer and the dealer. The execution of this program is consistent with what the OEM stated in recent earnings updates regarding its plans to pursue more contractual-based revenue outside of the traditional managed print solutions (MPS) office segments, with an “everything as a service” approach.

Replenishment logos for Best Buy, Office Depot, Staples, and Amazon

The shift toward contractual sales models is upon us, as manufacturers and resellers step up their offerings of this type of purchasing in traditionally transactional channels. Several resellers have partnered with printer OEMs to provide replenishment services, or at least to connect the customer with the manufacturers that do. Merchant-specific replenishment programs include Amazon Dash Replenishment Service, Best Buy Easy Replenish, Staples Auto Restock, and Office Depot Subscriptions. Like manufacturers, these retailers are competing against one another for supplies revenue.

Personal printing habits have evolved and to the print industry's dismay, declined, as digital media is now the mainstream. That doesn’t mean that print is going away, however, as there will be a need and desire for it in the foreseeable future. In order to deal with this significant shift, manufacturers are tasked with re-imagining the mature print industry to drive demand and increase brand loyalty. Automatic supplies replenishment will play a progressively vital role in maintaining market share as OEMs shift toward more service-based business models, blurring the lines between contractual and transactional sales.

For more than 16 years, gap intelligence has served manufacturers and sellers by providing world-class services monitoring, reporting, and analyzing the 4Ps: prices, promotions, placements, and products. Email us at info@gapintelligence.com or call us at 619-574-1100 to learn more.