Many times looking for partners that were not interested in selling their goods as a primary source of income as they didn't want to give deep enough discounts to actually compete in the market place against their direct organization or to create a newly formed competition in their industry. These "Value Added" partners were given the right to purchase product at a slight discount (like 15-20%) and were left to basically "throw in" the goods to create more impactful solutions with their core product. Many times the reseller doesn't even service or support the goods much like many of the resellers of bindery and finishing equipment.
Although these arrangements sound great for both parties it eventually waters down the market with disenfranchised dealers of products they work twice as hard to find business for which in the end pay less than have as much. Since they are not on the same buying schedule as "Fully Authorized Sales and Service" dealers they do not get the same discounts and incentives to market the merchandise and in many cases the same level of support (if any). These arrangements do nothing but ultimately take the VAR's focus off of their core product.
The office equipment industry has tried this many times a notable agreement of this nature was the "On Demand" dealer program that Konica Minolta launched. The "On Demand" program was launched to dealers of other products say a Fully Authorized Canon Dealership to fill a hole in the product line that Canon didn't have which at the time was the "light production color" arena. The dealer would not have high capital investments to get started which appealed to dealers that didn't want to be a full line dealer but needed a quick shot in the arm in one area. These dealers jumped on the 'light requirements' only to find out that they would not have the proficiency to sell and service the product and truly be able to compete against the "real dealers" and the direct outlet and win. These "On Demand" dealers were buying relabeled Konica Minolta equipment and selling directly against Konica Minolta Direct and Dealers that were far better suited to market the product. This arrangement was quickly cancelled by Konica Minolta once they realized that this was not the way they wanted their product sold and serviced.
In the end it only served to water down the market places with inexpensive deals sold as the newly formed "On Demand" dealers had inventory that they needed to turn and were not savvy enough to sell with margin so the local Direct and Dealer Channel ended up getting hit in the head with inappropriately priced deals by a desperate channel. This was during the great expansion when each manufacturer had many channels and multi level agreements and heavily weighed these channels against their direct operations.
Now we have the pendulum swinging the other way where Ricoh went back to huge dealer channels and bought them back to be able to shore up the level of service and support that their customers were getting. The Lanier purchase was an example of this "channel repurchasing." Canon which lived by the dealership channel has taken some serious blows to the head and pocket book and is now "joining the club" in respect to being more responsible for their own success. The level of support they have dedicated to their own group has doubled or tripled compared to the level of support that they give their best and largest dealers. Minolta didn't have much of a dealer channel but Konica did so the merge of Konica-Minolta added hundreds of new "competitors" to markets that only had one source of "micro toner." This created new issues for reps that walked up to signing tables and had to answer why the 3 bids came back for the same product and all the prices were different!
Now manufacturers want to control their own destiny and are bringing full line solutions to the table themselves cutting out as many VAR's and alternate channels as possible so that they can have a tight grip on the bottom line and ultimate control of the customer's destiny. These relationships are hard to manage when there are so many partners involved that no one wants to take ownership of an incompatibility. No one wants to go back to the drawing board and rewrite firmware.
Canon took its first step by making their offer for Oce. This was first announced January 28th 2010 with a public press release.
"28 January 2010— With reference to the joint press releases of Canon Inc. (trading symbol CAJ) ("Canon") and Océ N.V. (trading symbol OCE) ("Océ") of 16 November 2009 and 14 December 2009, Canon Finance Netherlands B.V., a wholly owned subsidiary of Canon (the "Offeror") and Océ hereby jointly announce that the Offeror is making a fully self-funded, public cash offer for all the issued and outstanding ordinary shares with a nominal value of EUR 0.50 each in the capital of Océ (the "Shares") at an offer price of EUR 8.60 in cash per Share (the "Offer").
- Canon made this offer unconditional with its press release March 4th and set a time limit for the "post-acceptance period" which ends March 19th.
Canon has been making plans on what to do with this "new acquisition" rumor has it they will stay in their normal form and immediately cut off all sales of other manufacturers products which adversely affects Konica Minolta being an OEM for sister company Imagistics for some time now. Konica Minolta has already terminated their relationship with Oce for the Black and White "big iron" and has moved forward with their own platforms. Rumor also has it that Konica Minolta has been working on an IBM relationship for roll fed devices. It will be interesting to see how Canon divide up their new purchase and how much "Oce" do they keep for themselves and how much do they let sit as acquired "intellectual property."
- Either way they will be on their way to becoming the next Mega-Manufacturer.
Happy Sail'ing
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