Cartridge World Executive Chairman Rob Young. Credit: franchise.net
Rod Young speaks of changes the company has undergone and the future plans it has in order to stay ahead of the game, with finished goods replacing in-store refilling.
Franchise.net reported an interview with Cartridge World Executive Chairman Rob Young, who discussed the company’s “new look business model” developed to tackle the changing marketplace over the last five years; with “changing customer printing preferences, inconsistent product quality, competition and technological advancements” all impacting on the business in recent years.
In addition to providing chip resetting technology to stand against the OEMs’ strategy to release software preventing customers from using other cartridges, Cartridge World has also developed a new strategy for developing the business by introducing a “finished goods model”; with the company now producing its own cartridges that can be refilled and that, according to Young, “equal the quality of OEM printers and exhibit a much higher consistency”.
He added: “These Cartridge World ink and toner cartridges are engineered and manufactured in world-class, high-tech facilities to match the quality of the printers they are intended for and are reducing our customers’ business and consumer printing costs by at least 20 percent. They provide the same quality printing but much better value to our customers […] the big difference is that the cartridges are disassembled and we are re-using the plastic. It’s the plastic that takes two litres of oil to make one toner cartridge.”
As a result, Cartridge World’s business model has changed, with emphasis now placed on “finished goods displayed in a showroom environment”; while the customer profile has also changed to focus on the B2B market rather than consumers (B2C) due to decline in market growth in this area.
Refilling in stores is coming to a halt due to advances in technology meaning that “franchisees refilling in store will increasingly be unable to match the quality needs of the brand and the market”, as well as rising labour costs and the restrictions it puts on franchisees in terms of being able to visit business customers.
Young said: “In the old business model people are seeing a decline, people who are adopting the new model are seeing a 10 percent increase.” He added that stores that still focus on refilling “are in our bottom third of the network and many are showing year on year decline in sales reflective of the changing market and in a consumables business, loss of existing customers.
“On average these stores are reliant on walk-in customers, have low costs of goods sold (only 25 percent, before quality make-goods) but rising labour costs and falling quality. Often sales in these stores are under AU$20,000 (US$18,000/€13,000) per month. Equipment costs to refill and test cartridges have meant set up costs for these shops often exceeded AU$150,000 (US$137,000/€98,000).
“In contrast, our new finished goods model stores cost less to set up […] are averaging over AU$33,000 (US$30,000/€22,000) monthly turnover and growing year on year at over nine percent”.
In terms of skills needed for the new business model, Young said that the company is looking for “mid to upper executives”, with experience in sales and marketing becoming more relevant than production skills.
A further initiative in the US has also been introduced in response to the 60 percent of the country’s population who do not have access to a Cartridge World store, with the company launching an e-commerce model offering a “click and deliver” or “click and collect” option for online customers. This also allows franchisees to gain income from “any customer transaction in their region” as well as acquiring customer details; with Young deeming the first month of this initiative a success and the e-commerce model expected to be launched in Australia in April.