Monday,
August 11, 2003
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Feature |
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Refilling gets
lucrative
Ellis Mnyandu & Steve James
THERE'S
gold in those empty inkjet printer cartridges. A thriving new economy
has grown from selling refilled or remanufactured cartridges for up to
80 per cent less than what manufacturers like Lexmark International,
Epson, Canon and Hewlett-Packard charge.
And, the big office-supply
superstores, such as Staples and Office Depot, have got into the act,
collecting empties and shipping them to third parties for refilling and
selling in their stores under their own labels.
The cash value of empty
cartridges — a used Lexmark can fetch up to $7 — has spawned a vast
recycling movement and the Internet is clogged with ads for companies
offering refill kits or remanufactured cartridges for computer printing.
A Website for buyers and
sellers lists prices for the estimated one million empty ink cartridges
thrown out daily around the world, mostly by individuals with home
computers. Most cartridges can be refilled at least two or three times,
or even as many as 10 times, according to experts.
In contrast, laser
printers that use toner are used more by companies, which return empties
directly to the manufacturers.
It may not be an ink war
yet, but the big manufacturers have already felt small-arms fire from
refill-merchants, who can operate out of their own kitchens.
Such is the value of
empties that tales are told of armoured vehicles delivering cartridges
in Latin America. And, Office Depot has acknowledged that shoplifting of
ink cartridges ate into its second-quarter profits.
As a result, the big
makers are trying to hit back with technology like ‘killer-chips’
that can disable equipment, to keep consumers buying their higher-priced
brand-name cartridges.
Snatching the market
"They absolutely hate
us. We are taking market share from them," Mark Ansier, vice
president of Toner Plus, an Austin, Texas-based remanufacturer, says
about the big makers.
"They (cartridges)
are a valuable commodity. That’s why they are collected in all parts
of the world and resold. In some parts of the world they are being
stolen."
"Buying and selling
cartridges is a $100 million business at the moment," says Ian
Marzonie, president of Anzen Corp., which remanufactures and refills
1,00,000 cartridges a month at its 40,000-square-foot facility in
Denver.
For example, his company,
which operates the InkjetUSA.com Website, offers the Hewlett-Packard 78
cartridge online for $20. The same name-brand item in a store retails
for $53.
Lexmark, which warned last
week it would miss third-quarter earnings estimates because of slowing
demand for ink cartridges, downplayed the threat.
"The proportion of
total sales of supplies that is taken by these refills is a real
minority," Chief Financial Officer Gary Morin recently told
Reuters. "In many cases, it is actually a declining phenomenon. It
has not been a successful foray."
Not so, says Jim Forrest,
of Lyra Research and managing editor of the Hard Copy Supplies Journal,
a publication for the digital printing and imaging industry. He said
refillers now control 15 per cent of the market, and that is rising.
According to Lyra’s
research, the total value of the inkjet business, including after-market
and refill kits, is $21 billion. Forrest said 794 million ink cartridges
were shipped worldwide last year, working out at 2.2 million per day,
including refilled and "compatible" cartridges.
Boom time
"There is a booming
market for empties, they are worth money, up to $ 7 or $ 8 each,"
he says. "Companies are prepared to pay lots of money for large
quantities of clean empties."
Staples plans to donate $1
for every cartridge recycled in its stores, with a goal to raise $5
million for public education. It said 80 per cent of inkjet cartridges
are thrown away.
"The customer is
looking for value and we feel we offer a wider selection of
remanufactured ink cartridges," says David D’Angelo, Staples vice
president for global sourcing.
He says remanufactured
cartridges sold at 10 to 20 per cent below the price of those made by
branded-product makers. "We hope to gain more market share. This is
a very competitive business."
Forrest says the problem
now is getting empties, because inkjet printers are used mainly by home
users who get through maybe one, two or three a year and throw them in
the trash.
Of the major inkjet
printer makers, Lexmark has the lowest rate of remanufacture — 6.6 per
cent last year but rising to 7.9 per cent in 2003, he says.
Hewlett-Packard’s third-party remanufacture rate is expected to be
13.5 per cent this year.
"Lexmark’s
cartridges are the most difficult to fill," says Forrest, "The
inkjet design is extremely difficult, if not impossible, to clone
because it includes so many patents and integrates the print-head to the
ink
tank."
"We’re in a
dogfight with the OEMs (original equipment manufacturers)," Ansier
says.
It is an "absolute
fallacy" that consumers might lose a warranty for using anything
but an authorised cartridge, he added. "You can use any gas you
want in a car."
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