Manufacturers say third-party printer ink hurts quality. But refill retailers argue their products are just as good.
By DAVE GUSSOW
Published October 11, 2004
When Chad White dreamed of opening his own business, he didn't want a franchise. A mall wasn't the location he had in mind. Selling refills for printer cartridges wasn't even on his radar.
Naturally, now he hopes he can strike gold with all three. In particular, ink for cartridges seems to be turning into black gold for entrepreneurs, as White has discovered since opening an Island Ink-Jet kiosk in August at Westfield Shoppingtown Countryside.
"It's really a good market to be in," said White, 33. "I thought it was low risk from a business perspective."
While inkjet printers are getting cheap, their ink is not. It has fueled a market for less-expensive no-name refills that can cost less than half of brand-name cartridges.
Among the pitches from the third-party vendors: Their ink costs about half of what brand-name replacements cost, the quality is good and they keep used cartridges out of landfills.
Yet those are fighting words for companies such as Canon, Hewlett-Packard and others that make printers and sell their own ink. They say their printers work best with their own supplies.
Once a specialty on the Internet, ink resellers are opening in malls and strip centers, such as Cartridge World in Tampa and Island Ink-Jet, bringing the competition closer to home.
The stakes are high, with the market worth $20-billion to $30-billion a year, according to Lyra Research. Manufacturers such as Canon, HP, Epson and Lexmark dominate with more than an 80 percent market share.
It also raises the question - again - which is better? And there is no black-and-white answer on that one. Tests by Consumer Reports magazine favored the brand-name manufacturers.
"Page for page, off-brand inks yield little savings, despite their selling prices," Consumer Reports said in its May issue. "What's more, we found that off-brand inks have shortcomings that their brand-name counterparts do not: They are likely to yield lower-quality color photos and graphics, and they might clog the nozzles in the printhead."
It's not better doing your own with inkjet refill kits, according to a survey by Lyra Research. It found about that about two-thirds of the consumers were unhappy with the product.
Several factors have caused the market to explode, says John McIntyre, vice president of custom research at Lyra. Ten years ago, inkjet printers could cost $300-$400, so the price of a cartridge wasn't that noticeable. With cheaper printers, the cartridge prices have become more of an issue.
People are printing more, especially more color because of digital photography and "they're eating up cartridges," McIntyre said. They're also printing more Web pages, another drain on color.
"All things being equal, people like to have a choice, or at least the perception of choice, when it comes to spending their money," McIntyre said.
So in addition to Internet retailers, Cartridge World and Island Ink-Jet, office supply chains such as Staples and Office Depot and retailers such as Wal-Mart offer third-party ink, adding a comfort level to a buying decision.
"There aren't a whole lot of consumers ... who are not aware that there are third-party solutions out there," McIntyre said.
Frank Romano, administrative chair of the School of Printing Management and Sciences at the Rochester Institute of Technology, called the brand-name arguments of a "system" requiring the same brand printer, ink and paper "a marketing ploy. You can optimize a system with all of those variables. ... But what kind of user needs the ultimate quality? The average user does not."
The bottom line for many remains the price of the brand-name cartridges, some of which can cost $30 to $40 each, which is creating a consumer backlash, Romano says.
In addition, he says, printer companies are doing all they can to protect their valuable turf, changing models and print head technology frequently and even putting chips in their cartridges to prevent refills.
"The revenue stream from the machines is absolutely minimal," Romano said. "They can give the machines away. The money is in the consumables."
Printer companies say it's more complicated. One, they have said they do make money on the printers. They also spend a lot on research and development.
It can take up to five years to develop an ink formulation, says Boris Elisman, vice president of sales marketing for Hewlett-Packard supplies. More than 100 variations might be tried before one is ready, with thousands of hours of engineering time invested.
"Putting down a drop of ink on paper is not as simple as people think it is," Elisman said. "If it was, it would have been done a thousand years ago."
He also challenges the claims that third-party inks match brand names in quality at lower costs. "There is no proof they can show that they are the same quality," he said.
At Canon, a red in one printer is not the same formula as for another, says John Lamb, the company's senior marketing manager for the printer group, because of differences in the print head and other factors.
So he questions claims on some refill kits that inks are compatible with models from different manufacturers.
"Color tables are so specific to the ink," Lamb said. "Even a minor change may require a change to the (software) driver themselves."
And while some document printing may not require exact reproduction, photos are another matter. "Especially with skin tones, any minute error, it may make your kid look like he had bad fish for lunch," Lamb said. "The skin is the hardest color to reproduce."
Burt Yarkin, CEO of Cartridge World North America, says his company's inks work just fine and it guarantees the product. The manufacturers "like consumers to think you can't get a quality refill (from us) and that's not true."
Cartridge World has a store open on Kennedy Boulevard in Tampa and hopes to have others open soon in the Tampa Bay region. The key to the company's growth will be building its brand recognition, Yarkin says.
"People may have heard about a refill cartridge, but they don't know it or trust it," he said. "By having a brand, being local in a neighborhood, this a thing Americans will be able to trust."
The process at both Cartridge World and Island Ink-Jet is intended to be fast. Cartridge World checks the cartridge to make sure it's usable. Once that is determined, it takes about 10 minutes to refill.
Island Ink-Jet's time ranges from 20 to 90 minutes, giving customers time to wander the mall and then pick up their cartridges.
As for the Consumer Reports' findings, White at Island Ink-Jet was disappointed that it perpetuates a stereotype of third-party inks and that his company's products were not part of the test.
But he's not discouraged and plans to open more kiosks at other area malls.
"I think places like Cartridge World and Island Ink-Jet can perform a service and save you significant money," White said. "And we guarantee it to be as good or better" than brand names.
