Fighting off competition from OEMs

The theme that seems to be prevailing in the market these days is that of
reducing costs and increasing efficiency. In such a scenario the cartridges
industry is seeing a major transformation in the demand for cartridges-from OEM
cartridges to refilled/re-manufactured cartridges. The re-manufacturing
industry, which has traditionally been unorganized has, of late, started getting
organized. This is turning out to be a big, viable option for many partners in
the space. Refilled cartridges are a good option for customers who want the
quality of an OEM offering but at an affordable price.

“There was a distinct need for OEM quality, affordable price options,” said
Naveen Rakhecha, CEO, Cartridge World, South Asia. “We offer refills with
comparable quality at a fraction of the cost of OEM cartridges and the largely
unorganized refill market was offering cheap but poor quality alternatives,” he
said.

The market has a huge potential globally as well as nationally. The global
printer cartridge industry is said to be worth $101 billion. In India, industry
estimates reflect that printer consumables market is worth more than Rs 2,500
crore and is growing at over 30 percent YoY.

Also, India is tipped to become the largest Internet using country in the
world by 2010. This will further boost the printer and cartridge industry; as 61
percent of printing activity is globally attributed to the Internet.

But the grass is not as green as it looks from a distance. The industry is
still at a nascent stage and has a long way to go. “The biggest and foremost
challenge is the unorganized state of the industry. Awareness is the other major
issue working against us,” said BB Somani, CEO, ABBEE Consumables and
Peripherals Sshope, Pune.

However, he said that in the past few years, due to branding exercises, the
awareness level has gone up. Still a large number of consumers are still unaware
of the organized refilling industry. Some people are also skeptical about
re-manufactured and refilled cartridge.

The OEM (original equipment manufacturer) cartridge industry is the only
threat to the refilling industry. They warn users not to use
refilled/re-manufactured products, otherwise warranty of the printers will be
scraped. Time and again they also appeal through the media, asking users not to
use refilled products, which the industry people see as a commercial interest.

Talking about the issue, JM Dassani, Chairman, Faxon Imaging Technologies,
Navi Mumbai and President, India Cartridge Remanufacturers and Recyclers
Association (ICRRA) lamented, “The major challenge comes from the original
equipment manufacture (OEM), especially HP, which spreads false information
through advertisements regarding re-manufactured products.”

Dassani said that these OEMs have huge finances available at their disposal
by way of making huge profits from consumables like inkjets and laser
cartridges. Therefore they spent on advertisement stating that one should not
use re-manufactured/recycled products because of the low quality and less number
of pages per cartridge compare to their products. They also say that
re-manufactured products can damage printers, make the warranty of the printer
void and that the failure rate of re-manufactured products is higher than OEM's.

He emphasized on the need to organize the industry by educating them about
the technology as well as making customers aware of the quality product from
re-manufacturers.

Rakhecha pointed out that in the next few years one might see the gradual
phasing out of unorganized segment as cartridges continue to become more and
more intelligent. Scientific processes, raw material and use of technology will
become a necessity for the after market industry to overcome the barriers. This
will call for substantial investments to be made by all players in the market.
With all these plans in place, growth in color cartridges market will also
become imperative.