Reshaping the Office Products Industry: Delving into the Role of Technology in the Disruptor’s Path

The office products industry is ripe for channel agnostic disruption. But first, the technology platform that eliminates barriers in the current value proposition must be deployed. This will then become the trigger for a disruption that will start in the transaction-dependent office products vertical before it moves on to overwhelm the equipment channel.

Business transformation and disruption are overused terms we hear with ever-increasing frequency. It’s common for innovators to promote themselves as “the next big thing” while comparing their concepts to widely recognized disruptions such as Uber (paid ride) and Netflix (entertainment) industries that have already transformed. While it’s quite common for innovators to believe they’ve created the latest disruption, often this is not the case. While they may have developed a value proposition that provides incremental improvement, it’s far less likely the barriers that combine to block disruption will have been fully eliminated.

A little more than 10 years have passed since we had to visit the local Blockbuster to rent a movie for the weekend. Then Netflix arrived and transformed the experience by delivering movies on demand directly into our homes. In doing so, they eliminated the time it took for us to get to and from the store, they removed the friction resulting from frequent supply constraints on popular new-release movies, and they wiped out late fees, the biggest source of profits in the legacy model.

Amazon is also a disruptor because they transformed the shopping experience by removing barriers, causing the downfall of many high-street retailers who failed to respond to the threat. They use technology that presents the widest choice of products possible, the most-competitive prices and the fastest delivery. It has become unnecessary to physically go to the store, even if some of us still prefer to do so.

Disruptors are attracted to large, mature industries; typically, the players inside those industries cannot see or understand the threat of disruption until it’s too late. Usually, it takes an outsider who has a completely different perspective to come up with an alternative that will be adopted by the market.

Regardless of how valuable a product, service or company has been in the past, loyalty rarely counts compared to the convenience or the benefits of other simplifications in the process that are introduced by a competitor.

It is our view that the office equipment, products and supplies industry is ripe for a technology-led disruption event, one for which resellers are poorly prepared. The most-common technology platforms resellers operate on were built to support the way business was done in the past, but aren’t as adaptable to future market changes.

  • These platforms do little to help independent resellers survive the threat posed by Amazon and other online competitors.
  • While some may be evolving, there is little evidence of a movement toward technology designed to remove barriers built into the current value propositions.
  • They are incomplete solutions that do little to help technologically unsophisticated owners improve their online presence.
  • Lack of systems integration impedes the ability to convert raw data into actionable business intelligence.

With more than 70% of buyers searching online for answers before engaging with a salesperson, it has never been more important for the independent resellers’ website to become a destination for addressing a potential buyers’ research.

Technology and the Digital Workplace

Technology is also disrupting the way people work. Though, Amazon or no Amazon, the process used to provide customers with the office products and services they need hasn’t changed substantially during the last 10-15 years. Furthermore, it is failing to adequately account for the ground-shift in how workers operate, where they operate from and how businesses are starting to adapt to these changes.

Software tools, in combination with access to the internet, underlie massive changes in workflows as documents are “born” digitally. This reduces, or even eliminates, the need for printed output. The internet enables 24/7 access to digital filing cabinets and facilitates remote sharing and collaboration for content creation and approvals. These two technology factors combine to remove the shackles that used to tie workers to corporate offices.

  • An important consequence is the rapid dispersal of the workforce away from the corporate office.
  • This trend serves to eliminate the time workers used to waste commuting to and from their employer’s office.
  • The combination of software tools, internet access and remote working means workers are becoming more efficient than previously possible.

These factors must also be considered alongside the changing profile of the workforce, as millennials continue to make up a larger share. It’s important to understand that they typically have a different outlook for their career paths than workers from previous generations. While it may be a difficult change for legacy employers to accept, they choose to exercise more control over their lives, value leisure time more highly and elect to work more on their terms than those of legacy employers. Typically, if their employer does not permit them to work flexible hours remotely, they will choose a different one. This means the employer who decides not to accommodate the lifestyle preferences of a millennial is unable to attract or retain the best talent.

Now think about this trend in the context of the typical set of office requirements. Instead of using the employer’s capital assets and services (furniture, copier machines, office space, bandwidth, etc.), someone else’s assets are utilized instead. This has profound implications on the future requirements of a business—it will purchase less furniture, lease less space, and buy fewer technology products, business equipment items, office products and supplies for their corporate office.

Although many of these products and services may still be needed, more and more will be for remote locations rather than the corporate office. This dynamic complicates the process and responsibility for cost control, and becomes an entirely different ballgame for the traditional management structure to deal with. Indeed, this is one of the numerous friction points that underlie the employer’s reluctance to allow workers to work remotely.

Obsoleting the Central Print Station

When people worked more regularly in the office, and when just about everything was printed and copied, there was a strong argument for establishing central print and copy stations designed for low-cost, high-output requirements. These circumstances supported the business case for expensive copier machines and spawned the managed print, service and repair business model, along with multi-year contracts and cost-per-page billing models. But reduced print volumes and dispersed workers mean this value proposition is no longer appropriate for many businesses. Furthermore, despite the shift in customer requirements, the channel that sells copiers has been slow to adapt because doing so would have a profoundly negative impact on their current business model. Instead, the channel continues to sell an old value proposition based on brand-centric solutions from dealers operating within territorial boundaries that are closely controlled by their original equipment manufacturing (OEM) partners.

While you can configure and purchase a brand-new Tesla online, just try doing the same for a copier machine!

Consequently, many businesses continue to purchase or lease high-capacity copier machines and organize their office around the central print location, even though they may no longer need to do so.

Changing Spend Patterns

Consumers are diverting their spend toward online solutions such as those provided by Amazon. While this trend may be gaining traction more quickly in transaction-heavy channels (such as office products and supplies) in which comparison shopping is simple to do, it would be naive to think it won’t continue into the office equipment channel. Furthermore, this is likely to take place regardless of the bundling of services and multi-year contracts that are designed to make comparison shopping more difficult—they may delay the threat Amazon poses to this channel, but will not eliminate it.

It’s common for many of the dealers to start thinking they must copy Amazon’s business model to compete or, worse still, join their marketplace to develop their online presence. Setting up an e-commerce store to compete with Amazon is unlikely to succeed, and joining their marketplace ultimately results in the handing over of customers. Neither are viable strategies. Remember, Amazon incurred 15 years of losses and spent billions of dollars building its value proposition and today, it doesn’t even make its profits from shopping. Instead, it makes the bulk from Amazon Web Services (Cloud Hosting) and Amazon Prime (memberships and digital content).

Dealers who leverage Amazon’s technology (rather than their own) to try and remove barriers in their current value proposition advance Amazon’s endgame and accelerate their own downfall.

Think about the inverse relationship between customer loyalty and an alternative value proposition that eliminates existing barriers. Consider how the equipment channel has resisted taking the lead to reduce the total cost of ownership related to printing devices and their output. Think carefully about this in an environment of ever-reducing print volumes. The page-wide-array business inkjet printers from Memjet and HP have been available for years, but their market penetration is very small despite their lower cost of ownership. One of the main reasons market penetration is low is likely because the revenue per device is as little as 25% that of an over-priced, under-utilized, legacy copier device.

How many dealers can embrace a value proposition that generates a quarter of the revenue the current one does? Not many, so instead they focus on rolling existing customers into new equipment leases and evergreen service agreements to protect themselves from external threats. However, this legacy value proposition is increasingly vulnerable to a new proposition that eliminates:

  1. Customer friction points incurred with complex, multi-year agreements.
  2. Provisioning excess print capacity.
  3. Deploying equipment that requires frequent service and repair.

The legacy value proposition is even more vulnerable to a new proposition that also solves the other emerging problems businesses face, particularly those of managing a spend in locations outside the central office that will become increasingly difficult for purchasing managers to retain control over.

It’s a value proposition that:

  • Leverages existing technology to monitor print volumes, cartridge reorder points, and authorized vendors for resupply.
  • Goes beyond helping manage the spend on traditional office equipment and supplies by providing a scalable solution that helps manage the myriad other issues of a remote workforce.
  • Helps customers onboard and offboard employees, their company-issued assets and their company-related activities.
  • Allows customers to intelligently determine what their true requirements are and only to purchase what they need.
  • Facilitates flexible bundling of products and services configured so customers only have to buy what is needed without having to get a lawyer involved to provide the okay for a CFO to sign-off on.
  • Provides seamless access to reordering portals using mobile apps designed to accommodate a dispersed spend—significant amounts of which will be initiated by remote workers—while ensuring the corporate purchasing department has full control over that spend.

In delivering such a value proposition, resellers can present customers with a compelling case for supplying a broader range of products and services they need to survive in a shrinking market.

Setting up an e-commerce store to compete with Amazon is unlikely to succeed, and joining their marketplace ultimately results in the handing over of customers. Neither are viable strategies.

Unfortunately, not every independent reseller can survive in a shrinking, changing market. The question becomes whether the only survivor will be Amazon, or if it will be Amazon alongside a large group of financially healthy, independent resellers. Resellers can thrive locally by delivering services the giant behemoth can’t. But they must adopt the technology necessary to match the logistics performance of Amazon while also providing the range of products and services their customers need. Unfortunately, while local service, management access and know-how are all attributes customers value, even when these are combined with “Amazon-grade” logistics technology, it’s unlikely to be enough to deal with the long-term online threat.

Remember, taxi customers and movie viewers didn’t define the services Uber and Netflix provided, just as the customers for office products and equipment will not define the services they will embrace in the future. It must be down to the visionaries who understand the barriers and who have the capabilities to deploy a system that eliminates them. This and only this will serve to disrupt the industry, while also serving to potentially take the initiative away from Amazon and other online threats.

Technology and the Disruption Cycle

Even when technology is available that eliminates existing barriers, there must still be someone sufficiently motivated to pull the trigger it represents before the disruption cycle can begin. Think about the equipment reseller who is compromised by top-line objectives and can’t pull the trigger because it results in a potentially catastrophic reduction in revenue. Then consider the office products channel sales resources which, although they may already sense an opportunity in the equipment channel, are not equipped to talk to prospects trained to listen to service-oriented sales pitches.

Unfortunately, while the office products dealers may be less conflicted to pull a disruptive trigger, they’re not currently equipped to do so in the channel in which the biggest opportunity may lie.

What all this means is that an additional burden is placed on the technology solution before it can become a trigger for the disruptive event. Ultimately, this solution must be sufficiently intuitive and compelling, so it will be embraced by resellers in the office products channel and rapidly adopted by customers in their transaction-oriented business model. Only then will it move on to be adopted by customers in the service-oriented equipment channel.

Ultimately, once the process has started, the equipment dealers will have no option but to adopt it, or they will go out of business.

Ian Elliott
About the Author
Ian Elliott is a strategic thinker with strong analytical skills with 35 years of executive management experience in the office products, equipment, and supplies industry. He is the founder and CEO of E&S Solutions and an early adopter of ERP/MRP, SaaS & cloud computing systems. He helps independent resellers transition from the analog to digital world using his expertise in supply chain logistics, social media, inbound marketing, e-commerce, and SEO. He can be reached at IanElliott@EandSsolutions.com or visit his website EandSsolutions.com.