Mailing Equipment Industry Sees Big Changes Ahead
Wednesday, November 16th, 2011 | Industry News, Operational Tips | No Comments
Historically, the mailing equipment industry has successfully defended off competitive pricing making it one of the most lucrative businesses around. Recently, Data-Pac and Secap have surfaced as new options for those seeking postage meters. It would seem that there are now 6 companies competing for your business but in reality, Swiss Ascom Hasler and French Neopost are now the same company offering the same products for the same price and Secap is the Pitney Bowes brand offered through independent dealers. So now there are 4 players, 2 domestic and 2 foreign. The new competition has helped keep the machine cost down but there are other ways to make a buck.
Excessive Profit Area #1: Supplies
A major source of revenue for mail equipment manufacturers and dealers of mailing systems is supplies. Postage meter ink and meter tapes or labels may not seem like a significant expense if you’ve never made these purchases but rest assured, it adds up quickly. At the high end of each line, a manufacturer’s OEM replacement ink cartridge for a Pitney Bowes, Hasler, Neopost or FP mail system ranges from $200 to $400. A high volume mailer might go through a dozen of these each month.
Until recently, there were no outside sources for meter ink and the prices weren’t going down. A few companies such as MailShipDirect.net began offering ink cartridges for postage meters and addressing systems for as much as 70% less than dealers and manufacturers. The dealers and manufacturers struck back by threatening customers that using other inks would void their manufacturers’ warranties. After numerous lawsuits and revisiting the Sherman Antitrust Act (1890) & the Magnuson-Moss Act (1975), this practice was deemed undisputedly illegal. It is rumored that service technicians are now commissioned with the dirty work of scaring customers into paying top dollar for their ink. Don’t be fooled. The quality and yield of ink cartridges manufactured elsewhere are often higher than the equipment manufacturers. MailShipDirect.com boasts that their Pitney Bowes ink cartridges are always new, are very high-quality backed by a 1-year warranty, specifically designed and engineered for its intended mail system model, significantly less expensive and on top of that, they average a 15% higher yield than OEM.
Excessive Profit Area #2: Service
Another major source of revenue for mail equipment manufacturers and dealers of mailing systems is service. For most customers this has been either a major source of frustration or an indispensible resource and thus a justifiable expense. In both cases, one thing is certain. Most providers of mail equipment will have you think it’s far more valuable and necessary than it actually is. Service or maintenance, depending on who you’re talking to, represents the single highest profit margin in the mailing equipment industry. So here’s the dirty truth… Maintaining mail equipment isn’t that difficult. The problem is that if you’re a Maintenance Manager or a Service Technician your job-security depends upon the complexity of the work. Therefore things are made to seem more difficult than they actually are. So what’s the point of all this? If your business can either .
A. Maintain your equipment internally or
B. Obtain maintenance from a 3rd party
Then you are no longer forced to pay such high prices for your service and support. One company, Streamline Group, has decided to make this possible for their customers. “Instead of forcing our customers to become dependent upon us, we empower them,” says Streamline Group’s owner Eric Bernstein. “Teaching customers and providing them with valuable information earns credibility.” Of course, Streamline still provides the full-service treatment to customers that want it.
For some customers that have ‘mechanically inclined’ employees on staff, Streamline will actually provide them with the manufacturers’ service training at their facility and teach the customer how to experience zero downtime. An obvious benefit to Streamline Group is this lifts logistical challenges when they sell equipment to long-distance customers. The benefits to the customer are thousands of dollars saved annually on service and never having to wait on service again. Other companies, like the aforementioned MailShipDirect.net, are solving this problem by offering inexpensive equipment online such as folders, inserters, pressure sealers and shredders and putting the customer in touch with local 3rd party servicing companies that are competing with each other on price.
