Resellers continuing in the pursuit of consumer markets run the risk of insolvency this year as margins are increasingly being eroded, a printer distributor claimed last week.
Leon Howe, managing director of long-term printer distribution company Star Micronics, told ARN that "margin is dead in consumer printers" and resellers should take note.
With a long history in distributing Star Micronics products in Australia, the company has been very successful in the past with each generation of consumer and corporate printers. Howe claims the era of proifitability on consumer printers is now over and he has virtually abandoned the market, proclaiming that the slim margins are not worth the effort. He is warning resellers of the perils of not identifying and responding to the trend.
According to Howe, Star Micronics is now almost 100 per cent focused on distributing the latest point-of-sale (POS) printers, a move he said was forced on the company because of waning margins.
"Resellers who fail to recognise that consumer printers are dead may well not be around in 12 months time," Howe said. "There is just no money to be made in commodity items. We have moved almost exclusively to POS printers because we are finding there is still good margin there.
"You do need a little nous to sell these solutions, but there is a whole lot more margin on them and great opportunities to add value. Dealers have to smarten up and try to find markets where there is still money to be made. There are markets out there that still offer huge margins."
Howe feels resellers looking for the next big thing in the channel could do a lot worse than taking a look at the POS solutions currently being embraced by retailers of all sorts.
Several issues have created a hot market in POS hardware over the last 12 months, not the least of which is the Federal Government's recent introduction of the GST, said Howe.
"Just about every retailer in the country has switched over to running their accounts on a computer. Thermal POS printers are very hot at the moment."
High-demand POS gear
Howe said Star Micronics has no intention of scrounging around for the tiny margins on offer in moving commodity printers when the reward for selling high-demand POS gear is so much greater. He suggested resellers should follow suit.
"There is so much demand being created by the revolution in retail. Resellers should be identifying and investigating it as a potential route to better margins."
Star Micronics has just introduced to its channel the latest range of thermal serial printers (TSP) which includes the first multicolour thermal docket printer.
Howe said one reseller, Venue Solutions in North Melbourne, is now rolling out the hardware as part of a project worth close to $40 million for one of Australia's leading cinema chains. The new Star TSPs are printing colour tickets for cinema goers.
"The sort of dealers we are doing business with in POS markets are still making good margins," he said. "Resellers would be lucky to get 5 or 6 per cent on other printers at the moment, and that would not be covering the costs of selling them."