PluggedIn:Cheaper inkjet, laser printer cartridges abound
June 10, 2003 2:46:00 PM ET
By Duncan Martell
SAN FRANCISCO, June 10 (Reuters) - Tucked away in the hills of Wisconsin is a group of monks who have decided that jumping on the imaging and printing bandwagon would be a financially rewarding way to support their monastery, the Cistercian Abbey.
Good-bye illuminated manuscripts, hello inkjets.
The business, which operates the Web site LaserMonks.com, (http://www.lasermonks.com), offers up to 75 percent discounts for businesses and individuals on printing and imaging supplies, including toner cartridges, inkjet cartridges, refill kits, copier toner, even cash register ribbons.
The market for printing and imaging supplies is a big one. Hewlett-Packard Co. (HPQ), the biggest maker of printers, derived $918 million, or 76 percent, of its operating profit in its most recent quarter from its imaging and printing business.
"It's a ridiculously high number," said Roger Kay, an analyst at market researcher IDC.
And, increasingly, consumers have options beyond going to Office Depot, OfficeMax, Fry's Electronics stores and other retailers to get inkjet and laser printer cartridges when they are running low on ink, or have already run out.
LaserMonks.com is just one of them. A Google search for "inkjet cartridges" yields 380,000 hits as well as a large number of sponsored links, for which businesses pay Google to post them next to the query results.
The price difference for buying inkjet and laser toner cartridges from manufacturers, such as HP, Canon , Epson, Lexmark International Inc. (LXK) and others and from a discount Web site is not inconsiderable.
"A Canon or Epson inkjet that they're selling for $20 or $25, we've got it for like $3 or $4," Bernard McCoy, one of the monks who is leading the project, said, adding that the quality of remanufactured cartridges has improved markedly over the last two years.
"We're just a small, simple monastery in many ways, but I'd love to take on the big boys," McCoy said, referring to national retail chains OfficeMax and Office Depot. "David and Goliath is perhaps an apropos way of saying what we're trying to do."
McCoy said his hope for the business is to be able to support the Abbey's operating expenses and charitable giving, which together run about $120,000 annually. If things really take off, any additional profits will be given to charity.
"Would I try it? I think I would," IDC's Kay said of the monks' business, adding that in general he doesn't make a lot of online purchases because he believes the infrastructure of e-commerce is still somewhat unsettled.
"Even though it's true that you trust merchants with your credit card and your banks with your funds information, it's a little different when you're talking about third-party Web-type of buying," Kay said.
Of course, the big boys of imaging and printing let you purchase replacement cartridges on their Web sites, often at prices more expensive than can be had through discount retailers, either online or at retail, Kay said.
"We're talking a lot of black dust here," McCoy said, adding that businesses spend large chunks of their budgets on such equipment. "The enormous amounts of money that go into this, people don't really think about."
Despite slack personal computer sales, which also hurts demand for printers, Lexmark and HP have made solid profits on ink cartridges, the high-margin black and color replacement cartridges that users need to keep their printers humming.
In Lexmark's first quarter, for instance, total revenue was $1.11 billion, up 6 percent from the year-ago quarter, while sales of laser and inkjet replacement cartridges rose 17 percent to $642 million, or 58 percent of total sales.
"HP and Epson and those people will practically give you an inkjet," McCoy said. "Where they get you is on the long-term supplies that you'll need."
And if consumers can't be bothered to head to an office supply store or don't want to deal with an online discount retailer, Kay points to a service that Dell Computer Corp. (DELL) provides along with its recently unveiled line-up of printers.
"When your cartridge hits a certain level, it sends a message to the PC, which then sends you a message," saying that it's time to reorder cartridges.
"Dell has the part sent directly from their supplier, it goes direct to the user and he ends up holding the inventory," Kay said. "It's a clever idea."
(The PluggedIn column appears weekly. Comments or questions on this one can be e-mailed to duncan.martell(at)reuters.com.) REUTERS
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