Monday, 11 July 2011

Xerox, Canon, Ricoh Buying Small Resellers - Why?

What's with the strategy by high end copier/printer companies buying small resellers?

Xerox continued this activity last week by buying a competitor's reseller in Scotland and another in Middlesex. I have seen Ricoh do the same in Scandinavia on a grander scale where at least the reseller in question was a strong Ricoh player while it had also had several geographically dispersed offices and had a strong service capability. That at least augmented a manufacturer's position in the territory and gave it a working office base. In Xerox's case it just seems to be taking out a tiny portion of its competitors by buying a reseller and converting it to Xerox.

If that's a strategy, then it seems a very long play as there are thousands of these resellers all over Europe. It's also expensive, as you are either buying troubled or defunct companies with problems and debts or paying top dollar to owners that might play the vendors off against one another.

But where does it get you long term? Lots of small companies to be assimilated by giant companies it looks like. For the sake of a tiny gain in marketshare it seems a crude way to move forward.

This is likely the issue for Xerox and similar companies. The markets are mostly saturated and they are only after refresh and upgrade business mostly at lease break points. If a reseller sits on a significant number of opposition products under lease, then this option of moving the marketshare needle may the last hope.

But it's an awfully risky plan. Let's hope all the skeletons in the cupboards of these small companies are only small ones or else this strategy could be a financial fiasco.

No comments: