Ink; the new ‘black gold’

 

 

 

Ink cartridge refilling stations are cropping up everywhere, even at US drugstore chain Walgreens. Are they here to stay and how will the OEMs react?

 

For most people black gold is the moniker given to oil, but for the printer OEMs the phrase ‘black gold’ refers to only one thing – ink.

 

For Hewlett-Packard (HP), Lexmark et al, ink and the crucial replenishing of it is the lifeblood that pumps through their revenue streams. So the tricky subject of third party remanufacturers selling far cheaper compatible printer cartridges is an ongoing nagging problem. And now, the OEMs have a new and increasingly growing problem in the form of ink cartridge refilling machines.

 

The news that US drugstore Walgreens is using inkjet cartridge refilling machines in some of its outlets is another cause of concern for the OEMs. Ink refilling kits have been around for some time, but they have never really taken off as they are not the most user-friendly products due to their messy nature.

 

And trying to refill your own cartridge at home with a kit is not something to do if you want to keep your best silk shirt or new carpet free from ugly ink blotches. As if by magic, inkjet refilling machines have been springing up with the latest rash appearing, somewhat incongruously, in a chain of drugstores. So, what are the big OP retailers making of this trend? Well, it turns out they are pretty keen on it.

 

OfficeMax told OPI+ that it now has refilling machines in 50 stores in the Chicago area where it has been piloting the service and revealed that it’s planning an official launch later this month. Depot also told OPI+ that it has a pilot programme underway for ink refilling in Minnesota and North Carolina, and that it is working with the vendor TonerHead. And Staples is looking at it too. Spokesman Owen Davis told OPI+ that it is monitoring the situation although it believed that "it doesn’t seem like it’s quite ready for prime time yet and any rapid adoption of this offering would be surprising".

 

Jim Forrest, senior analyst at Lyra Research, believes that the spread of refilling machines will come down to quality. He said: "In my opinion, the jury is still out on these retail refilling machines. A lot depends on how easy they are to operate and how good the quality of the ink and the refill process is. If consumers start getting lots of leaky cartridges, it could turn off a lot of people to the concept."

 

The refilling machines incorporate a touch-screen user interface with the customer simply following the instructions on screen to refill their cartridges.

 

Of course, OEMs will not be pleased by this latest development but once again they will seek to counteract the cheaper option of refilling cartridges by pushing the quality factor in their favour. HP spokesman Neil Bayley told OPI+: "Ultimately, HP believes it is up to customers to decide which solution is best for them. While they can choose to use refilled print cartridges, they may not enjoy the quality, reliability and technological benefits that HP inkjet and LaserJet print cartridges deliver. Customers should also bear in mind that HP spends billions of dollars in research and development to create printing mechanisms, inks, toners and paper that work together as an entire "print system" to provide outstanding quality and reliability at affordable prices. "

 

So will the OEMs directly respond to this latest threat? Jana Munford, Current Analysis director of research for channels and imaging supplies, thinks the OEMs’ direct reaction will depend on how the retailers promote the refilling stations. She said: "I think the promotional efforts from retailers can be devastating to OEMs. Promotions inform users of their options and make them question even more the high price of ink cartridges. OEMs will have to react with pricing moves or creative promotional efforts that push quality or bundling."

 

Munford also believes the refill stations could and should spark significant action from the OEMs. She added: "I think the OEMs need to prepare themselves for battle. The inkjet refill station will force the ink industry to establish industry standards for yield testing, quality testing and CPP claims."

 

Interestingly, these refill stations will also compete against franchised refill shops such as Cartridge World and Island Ink-Jet, which have been growing at an incredible rate over the last couple of years.

 

Once again, the battle between OEMs and their cheaper alternative rivals will come down to a message of quality versus price. HP’s Bayley added: "There will always be some people who are willing to accept trade-offs in quality and reliability to save a little money. Refilling stations may appeal to these customers. However, whether customers are seeking photo-quality inkjet output that will resist fading for generations or crisp, laser printing for their business needs, current data shows that, overall, refilled products cannot consistently deliver the quality and reliability that customers enjoy with HP printing systems."