If Amazon’s taught the OEMs anything, it’s the value of having a strong and direct digital relationship with customers.
Amazon is the biggest reseller in both the print and IT industry for every vendor. Amazon doesn’t share customer data with OEMs, which is why you’re now seeing several OEMs push for this data. However, you should be careful sharing it (I would be).
The OEM/Amazon Battleground
Have you ever asked HP or Canon how much of their revenue comes through Amazon? They won’t share it. The numbers are shocking, and they’re growing fast. These OEMs are dominant in our industry, but even they don’t have authority over Amazon. They’re just another vendor forced to play by Amazon’s rules. Rule #1 is that vendors don’t get to know anything about the customers Amazon is selling to. So, how do you market to customers you don’t know, build brand loyalty, and sell them other products? Amazon would say, “That’s not your role, that’s mine.” But no company should feel comfortable today not knowing who their customers are.
The real problem is that Amazon has no loyalty to its vendors. If you look at categories like printers, it doesn’t matter to Amazon if a customer buys a Canon, HP, Brother, Kyocera… you get the point. They’re also ferocious about getting the supplies annuity, and since they don’t care about brand, they also don’t care if the supply going into those machines is OEM or compatible. That’s a big problem for the OEMs, because any hardware sold through Amazon basically goes into a black hole. Most OEMs are not making any margin on the hardware but are intending to make it up on downstream supplies which are no longer coming in. THIS is a crippling issue.
OEMs love the volume of sales, but they’re prisoners of Amazon. They give up massive points of margin, and in turn get nothing. Where’s the love?
Why does this battle between OEMs and Amazon affect you?
Well, as any plumber will tell you—s*&t flows downhill.
As a result, many OEMs are redoubling their efforts to connect to customers. HP, for example, is building toward a future that doesn’t require a channel to sell their products.
As you’re well aware, the value of your business rests in your customer base. Will those customers continue to buy from you? Can you sell those customers more tomorrow than you did today? Are you “sticky”? The answer to those questions is at the heart of your business value.
But what about the Amazon question?
What is your strategy to succeed in an Amazon world?
OEMs, like HP, have come to realize that Amazon is displacing them. They don’t have a digital relationship with their customers when products are sold through Amazon. So, their strategy? First off, they’re designing printers and programs based on subscriptions. Ones where the customer pays the OEM monthly, and you get a royalty. This guarantees a direct digital relationship between the customer and the OEM. You’re not necessary in this relationship. Amazon isn’t either.
So, why on earth would you sell a product that removes you from the business equation? I get what HP is doing. Given their massive dependence on small and home office customers, they need a strategy.
Whose Strategy is Better?
On one side you have Amazon. When you need a printer or supplies, you go to Amazon, buy it, along with any other items you periodically need, and receive them tomorrow. HP is betting that this process is somehow not ideal. They think customers will instead prefer a subscription.
Who wins? There’s room for both. Printing is just one piece of technology. It's not significant enough for many users to warrant a sales process outside of their daily Amazon orders.
There’s a lesson, and a warning here for all office print dominated resellers; the battle for your customers is a digital war. If either HP or Amazon win, you lose. You have many valuable local relationships with businesses. You need to cultivate those relationships and move them over to a digital buying process, one that includes more elements of technology than simply a piece of the shrinking print pie.
MPSToolbox can help you with the infrastructure and marketing to get going. Reach out today and let’s get started.
