Cartridge market heats up

Vinay Dalvi

Mumbai: The consumables market, which was largely overlooked by the industry,
is finally seeing a lot of action. HP recently announced that it will
concentrate more on the printing cartridges market and claimed that its
cartridges can do better than the refilled cartridges, giving a printing yield
of 2.4 times more that a normal refill or a re-cycled cartridge.

This is not all. Last month saw the formation of Cartridge Recyclers and
Traders Association (CRTAI) and ICCRA associations for the unorganized sector to
unite recyclers and re-manufacturers of cartridges and to gain a legal entity
for their business. Earlier this year, Australia-based Cartridge World brought
its franchisee business model to India and plans to open 30 outlets by Jan next
year. Just last week, Cartridge Cafe announced that it would open 100 kiosks and
stores to sell consumables to the end customers.

The price for printers has been steadily falling, as it has become a
commodity. Vendors, as a policy, sell printers at subsidized rates because they
plan to recover this price by selling cartridges, paper, toners and other
printer parts. This is a continuous revenue stream and so far vendors have
managed to milk this market. The unorganized refillers were a cause for worry,
but never one that unnerved the vendors. Now that the organized players have
entered the fray, vendors like HP are going all out to promote its own
consumables, than lose its turf to companies like Cartridge World or Cartridge
Cafe.

The battle has begun

HP is now planning to carry a huge marketing campaign highlighting that its
cartridges last more than a refilled or recycled cartridge and are reliable and
quality products. Puneet Chadha, Director, Supplies, HP India said, "HP has
long been concerned that ink cartridge buyers in India are not aware of the
reliability issues when using refilled cartridges. That is the only reason for
us conducting a study on the quality of other cartridges as compared to HP
original cartridges. 70 percent of the technology of a printer is inside the
cartridge." HP plans to increase its Cartridge Exclusive Stores to 1,200 by
January 2008.

Conceding to Chadha's point, Alok Bhardwaj, VP, Canon India said, "Customers
usually look for short term gains and they usually don't look for quality and
reliability. We try and draw customers to Canon cartridges by giving them
various schemes, like free cartridges with printers and a buy one get one free
scheme on cartridges. Apart from this, we are also planning a relationship
program for our loyal customers wherein we will be offering discounts and will
run various contests for customers." But the franchisee model operator
Cartridge World had something else to say about the whole issue. Naveen Rakecha,
CEO, Cartridge World India said that his company does not merely refill the
cartridge; it also changes all the worn components within the unit, thereby
entirely refurbishing it.

"This means we give customers an as-good-as-new cartridge at half the price
and they can easily re-use the cartridge till the casing is undamaged, or for 10
cycles," he said. Of course, this does mean that these products are more
expensive than that available off the roadside. Apart from all this, Rakecha is
so convinced about the refill quality of their cartridges that he is ready to
give 100 percent money back to customers who have a complaint. Cartridge World
is planning to have 30 operational stores in India by Jan 2008.

Another retail outlet, which will also follow the franchisee model and plans
to open at least 100 stores in six months in India, is Cartridge Cafe, owned by
Biz India Ventures. Raghavendran, Head of Operations and Business Development,
Cartridge Cafe said, "Our objective is to provide high quality refilling
without tampering with the cartridge, unlike others refillers. We will protect
the customer's investment on printers, and by offering a lower price on the
refilled cartridge which are as good as buying a new one, we will help our
customer save on costs."

Raghavendran further added that his company saw a lot of potential in India,
as people are showing preference for brands and quality. "We offer both
quality and brand and have recently launched our tamper proof ink cartridge
refilling machines. We hope to get a good response for the same and will start
with seven stores in the initial stages," he added.

Given all this traction in the refilling market, there are some signs of an
effort to get it organized. Shashank Ruiwala, Director, Indigo Imaging Supplies,
and President, CRTAI said, "We, as a part of the industry, need to maintain
quality and follow some standards so that all the refills are on the lines of
Standardized Test Methods Committee (STMC) standards which are global standards
for testing and evaluating performance of toner printer cartridges. We also have
technical sessions wherein we teach members of the association about
international standards and give them lessons on maintaining good quality for
refills. The environment ministry has also appreciated the efforts of the
refilling industry and now we are trying to focus our efforts on organizing the
industry so that good quality is maintained for refills. We don't want our
image to take a hit because of a few dealers."

Agreeing with Ruiwala, Rohit Shah of Jet Tec, manufacturer of inkjet and
laser toner cartridges, said, "Indian customers are smart. They always try a
product before they make bulk purchase. Today, customers understand the benefits
of recycling inkjet or toner cartridges."

It gives the same quality as the OEM consumables, comes with the same
warranty, saves the environment and most importantly, saves the customer a tidy
sum of money. In today's competitive world, every company is looking to cut
down on expenditure and using recycled products is a very good option.

Unknown to most, the cartridge filling business is estimated to be around Rs
2,500 crore in India and is reportedly growing at 30 percent annually. In fact,
cartridge sales are higher than that of printers as it is a peripheral that
needs constant replenishment.

It is therefore easy to see why OEMs want to dissuade customers from opting
for refilled options. But this is akin to hiding a light under a bushel.

In countries like India, Australia, New Zealand and China, the refilling and
remanufactured cartridge market is very strong and in countries like Korea,
Philippines and Indonesia, the OEM Cartridge market is very strong. The
refilling and remanufactured market is around 55 percent and the OEM market is
around 45 percent as per some experts in India.