When it comes to the world of print consumables, much of the Middle East demonstrates a strong preference for original products, a predilection that stems primarily from persistent concerns around the quality of aftermarket products.
And at the same time, original print consumables are also successfully gaining ground on the non-original segment (which includes refilling services, compatibles, cloned cartridges, and counterfeits), courtesy of effective campaigns initiated by the market’s major original equipment manufacturers (OEMs). But this battle is far from won, so here we examine the latest developments in the compatibles market and consider their implications for the region’s end users.
Historically, both laser and ink OEM print cartridges have been impacted by the availability of aftermarket consumables. Driven by a need to keep prices down, these non-original consumables are often produced with cheaper materials that are more likely to malfunction and ultimately cause the printer to break down. This is especially true for counterfeit cartridges, with unscrupulous suppliers misleading end users into thinking they are purchasing OEM consumables by using packaging that looks identical to the original product.
And in a bid to preserve the integrity of their hardware and secure the profitable revenue streams generated by consumables sales, OEM vendors are continually implementing new campaigns to combat the threat posed by aftermarket products. Indeed, the past couple of years have seen vendors such as Brother, HP, and Xerox all conduct various anti-counterfeit raids in collaboration with UAE law enforcement, successfully reducing the number of counterfeit products available in the local market. Similar campaigns have been conducted throughout the GCC region.
Unofficial imported consumables (also referred to as grey imports) pose the largest threat to OEMs across much of the Middle East. These are original supplies imported through unauthorised channels and are not intended for sale in that particular market. Print consumables traders will often take advantage of currency movements to import large quantities of cartridges, which will then be priced at a discount to what is currently available. End users often purchase these cartridges unknowingly and then encounter compatibility issues as the cartridges are designed to operate in specific devices for specific regions. Running alongside this issue is the fact that OEMs have much better quality-control processes in place, ensuring that the ink and toner cartridges they push through official channels have not expired or dried out. This additional layer of protection is simply not available with grey importers.
The response has been a concerted effort by OEM vendors to counter the ability of these grey importers to flourish in key markets across the Middle East. Earlier this year, for example, Xerox Emirates and the Dubai Economic Department initiated a UAE-wide programme to counter the illegal import of grey market consumables. A significant number of traders in both Dubai and Abu Dhabi were caught engaging in illegal activities, resulting in large fines and the seizure of their stocks.
Print vendors have also begun to focus on improving their own value propositions, particularly as a result of the squeeze they have felt from third-party consumables and refilling services, both of which are perfectly legal. A number of inkjet print vendors have introduced strategies aimed at increasing the capacity of their cartridges, thereby offering a significant cost-per-page reduction for the end user. Indeed, given the savings now offered by HP’s Ink Advantage series, Epson’s continuous ink tank system, Brother’s InkBenefit feature, and Canon’s XL line of inks, third-party consumables manufacturers are finding it much more difficult to entice customers away from original supplies. The introduction of larger-capacity ink cartridges has also led to a reduction in the availability of compatibles, as these new cartridges are more expensive to remanufacture or clone, making them much less profitable for third-party vendors.
In the laser space, original toners maintain a relatively stable share over aftermarket alternatives. This is particularly true in the higher-end segment, where devices are very expensive to repair and end users are not willing to risk a potential breakdown for a marginal saving on supplies. There are exceptions to this rule, however, with some leading compatibles vendors, such as German Imaging Technologies, offering warranties for both the consumables they sell and the end user’s existing hardware. The cartridges supplied by these reputable compatible vendors are subject to strict quality-control measures that ensure they match the original products, while still offering a considerable saving on price.
The biggest threat in the laser space is to those OEMs that have a current installed base that is heavily skewed towards the entry-level end of the market. End users in this segment are extremely price sensitive, especially when it comes to consumables, and a very popular option involves the use of refilling services for toner cartridges, as these services continue to offer significant savings on the cost of OEM cartridges.
Ultimately, OEM consumables vendors must employ a combination of strategies in order to effectively combat the threat posed by aftermarket alternatives. End users will continue to be attracted by refilling services, compatibles, cloned cartridges, and counterfeits, particularly when a significant price differential exists between these products and those on offer through official channels. Education is key in this regard, and OEM vendors would be wise to pursue such strategies both to protect end users from unforeseen additional costs and to secure their own long-term profitability.
The columnist is group vice president and regional managing director for the Middle East, Africa, and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC).