Imprinting a new image on the channel
Ricoh UK is looking to work directly with IT resellers for the first time in a bid to expand into new markets and increase its share of the printer market. Laura Hailstone reports from New York where Ricoh unveiled its plans for 2006
Over the past few years, Ricoh UK has been attempting to shake off its copier vendor image. This year the manufacturer is set to undergo a major transformation that it hopes will finally enable people to see it as a document management provider.
“Ricoh is the number one copier manufacturer in Japan, the US and Europe, but we are not just a copier manufacturer anymore, we can do a lot more,” Takahisa Yokoo, managing director of Ricoh UK, told CRN. “As well as manufacturing digital multi-functional copiers and printers, scanners, laser printers, and faxes, we also provide software for print and document management.”
Ricoh UK’s route to market in the UK is 70 per cent through its dealer channel and 30 per cent direct. At its dealer conference in Prague last October, Ricoh revealed to CRN that it wanted its copier dealers to team up with VARs and system integrators to help increase sales of its printers (CRN, 24 October). However, Ricoh is now looking to go one step further by directly recruiting 100 resellers this year.
The move is part of the vendor’s plans to break into the small office/home office (SoHo) market, which it plans to do with its new low-cost desktop printer: the GelSprinter. Ricoh, which holds the patent to the ‘gel’ technology, claimed the GelSprinter will fill the gap between ink and laser printers.
Currently there are only two prototype GelSprinters available in the UK, both of which are not network capable. However, in April and May these will be superceded by four or five new models, all of which will be network ready.
Speaking to CRN during a briefing at Ricoh’s New York Technology Portal, Paul Cheetham, director of dealer sales at Ricoh UK, said: “One of the key growth areas we have identified this year is the low-end market. Europe is expected to move huge volumes of low-priced products. We think the GelSprinter will revolutionise the SoHo market. We are establishing a distribution channel for these products.”
This is Ricoh’s first ever foray into the distribution channel, and the vendor has just begun a six-month trial and evaluation process with Computer Connections International.
“There are two ways to get into distribution: you can either set up 35 relationships with all the top distributors, or you can go to one mega distributor that will then distribute to all the other distributors. This is the path we have chosen with Computer Connections. It is already an £80m a year company, but it has never handled printers before, so this is new for it,” Cheetham said.
“Computer Connections has certainly got the infrastructure to take us to the market. It already supplies to firms such as Northamber, Ingram and Computer 2000, as well as smaller distributors. It has an average of 500 active trade resellers.”
Computer Connections will predominantly handle Ricoh’s SoHo and low-end business products.Ricoh has also set up a new business team to help it expand in the low-end market.
Cheetham said: “The 100 resellers we are looking to bring on board will be recruited through our new business team. We are looking for resellers that manage their clients’ networks. They might provide software but not hardware at the moment.
“A lot of VARs don’t sell printers. We want to complement their offering. They might sell PCs and laptops, so it makes sense to offer customers a printer as well. The UK distribution market is valued at £230m, according to figures from [analyst] IDC, and we will be taking our fair share of that.”
Ricoh claimed that the GelSprinter will give resellers a much-needed edge in the SoHo market.
Cheetham said: “Most SoHo customers have to pop to PC World to get a replacement cartridge for a printer. And they have to call out someone at £50 a time to get these devices repaired. The GelSprinters will be on a pay-per-page contract, so people working at home will just have to ring a number to get cartridges delivered, or to get a technician to turn up. That’s where we think we will have a certain edge in the SoHo market.”
Asked if resellers coming on board will upset Ricoh’s copier dealers, Cheetham said: “No, because we are recruiting VARs to sell different products in a different market, so there will not be any conflict of interest.”
According to Philip Grote, research analyst at Current Analysis, it is essential for Ricoh to get new partners.
“Ricoh’s distribution has traditionally targeted copier dealers that are not interested in smaller-value, SoHo and SME-type deals. I have been saying for some time that Ricoh needs to do something to target more SME customers, and this may be it. I expect there to be no conflict. Ricoh’s copier dealers aren’t interested enough to target these types of groups and will happily leave the small margins to the new partners,” Grote said.
Kevin Jones, managing director of Xerox reseller Printware, said price would be the important factor for the channel.
“We have been talking to Lanier, a division of Ricoh, about its devices. But we are more after a printer-based device than a copier-based device. I think Ricoh’s gel printer sounds interesting, but in the SoHo market, vendors have to be very competitive on price,” he said.
Jason Harcourt, senior analyst at Context, said: “It sounds like Ricoh is trying to do a similar thing to what Xerox did a few years ago. The fact that Ricoh is trying to get into the reseller market is good news for the firm. How well it will be received by resellers is another matter.”
Harcourt added that he thought the signing of a super distributor such as Computer Connections was quite novel. By doing this, Ricoh has instant access to the major distributors without having to do the work other vendors have had to do to set up a full distribution network.
But Harcourt added: “One wonders if distributors such as Computer 2000 will respond to having this relationship with Ricoh through Computer Connections. They might not be that receptive to promotions, which could put Ricoh at a bit of a disadvantage.”
Lee Bevan, managing director of VAR Leapfrog Computers, said promotions and marketing will be vital in helping Ricoh to penetrate the printer channel.
“My advice to Ricoh is, if it wants to do well in the printer market it needs to offer a programme such as TallyGenicom’s Commission for Life channel programme, which rewards resellers with 10 per cent commission on all consumable sales for the entire life of a printer. It works well and is what VARs want.”
Another area of growth Ricoh has identified is the high-end or high-volume market.
Cheetham said: “We are looking to go into the traditional realms of Xerox or Océ high-volume products. This market has grown spectacularly in the last five years. Aggressive competitive pricing is needed. Through our direct sales forces we will be recruiting specialist sales people, specialist analysts and specialist pre-sales people, and then doing the same in our reseller division.”
Ricoh plans to establish a production printing business in the UK and Europe during 2006.
“We are quite fortunate that our two largest dealers in the UK – IKON and Danwood – are already set up for this. They employ high-volume specialists so it is a perfect fit for us,” Cheetham said.
But, despite expanding into new markets, Ricoh said it must still focus on its traditional business.
Cheetham said: “We have to maintain the flat sales of our standard black and white MFPs [multi-function printers], and this year we will be launching a desktop black-to-colour device.
“However, as we increase the awareness of the Ricoh brand through the SoHo market and our new distribution network, we believe that our colour, and black and white laser printer sales will increase as IT managers become aware there is an alternative in the market.”
Ricoh has also realised that it needs to not only provide products but offer customers a complete solution. With this in mind, the vendor has developed a new engagement strategy: Total Document Vision (TDV).
Cheetham explained: “TDV involves looking at a company and seeing how we can capture every sheet of paper and put it onto a Ricoh device. In the average company, few people know exactly what equipment they have. Fewer still know how many users are operating what equipment.
“It’s very rare for people to sit down and decide to look at what they are spending on print and what equipment they really do need within their company,” he said.
“The responsibility is splintered. You have the traditional facilities management buyer, but you also have IT departments. As the copier and printer markets come together, it becomes more important that the IT manager gets involved in the purchase. If that happens, then our traditional route to market through the copier channel will not work. That’s why we are investing in educating our dealers.”
For Ricoh, the TDV is a nine-stage process that starts off with objective print auditing. Ricoh has software that it can put on to a client’s system that enables it to create solutions that will take its printer fleet and allow it to be managed, possibly with one invoice.
“Customer needs are our top priority. We have got the hardware and the software, and through working very closely with our clients we can build solutions that traditionally have not been associated with a copier manufacturer,” Cheetham said.
To cement its move away from its copier-vendor image, the vendor is launching two Techno Portals in the UK. The Portals are networked demonstration suites that the vendor will allow channel partners to use.
Yokoo told CRN: “The UK portals will be the first ones in Europe. We have one in Tokyo, one in Canada, and four in the US. When the UK ones are up and running we will be able to link all of them via a videoconferencing facility. I think two portals will be enough in the UK, but we might look to open some in other parts of Europe.”
The New York portal averages 90 demonstrations a month. Ricoh’s research has shown that by using traditional sales methods it won 29.2 per cent of business, but when it used the Techno Portal it won 67.9 per cent of deals.
The first UK portal will open shortly at Ricoh’s base in Feltham, followed by one at the Ricoh Arena at Coventry City Football Club in May.
Cheetham concluded: “We are moving from being a traditional photocopier manufacturer into the IT market, towards providing a complete solution. It’s a total culture change that we have been planning for over the past two years. We are now ready to take it to market.”
Contacts:
Ricoh UK (020) 8261 4000
Leapfrog Computers (0840) 443 8866
Printware (0870) 380 3700