The Consistent Revenue Stream Of Bar Code Media
When times are tough and customers' budgets tight, VARs look to bar code media to help strengthen their bottom line.
Most VARs and integrators selling AIDC (automatic identification and data collection) technologies take bar code media (e.g. printer ribbons and labels) for granted. After all, these products often act as your umbilical cord to the customer, keeping you in touch even after the hardware sale is finished. Sound obvious? According to some thermal transfer ribbon (TTR) vendors it's not. In fact, it seems only when the economy goes down the tubes do most VARs and integrators truly begin to realize the value of selling bar code printer ribbons and labels. "In difficult financial times, your existing customers are your best opportunity to increase sales," said Nick Mandrycky, senior VP of marketing at IIMAK (Amherst, NY). "Integrators are successful at securing ribbons business initially, but as time goes on, end users are approached by label converters and forms manufacturers who take away repeat consumables business. Consumables represent a steady revenue stream and are a great way to maintain a long-term relationship," elaborated Mandrycky.
Brett Cameron, director of sales and marketing for DNP (Concord, NC) agrees that the channel often overlooks the potential of the consumables business. "Many VARs balance out their sales sheet at the end of every month and look only at their hardware and software sales for revenue and profit," he explained. "The consumables business is often glanced over with no real thought given to the potential of this portion of their balance sheets."
Look Beyond Price In The Thermal Transfer Ribbon Market
In recent years, frequent mergers and acquisitions of thermal transfer ribbon manufacturers have led to a consolidated marketplace. Yet, many players still exist in this field. And now with prices dropping, the remaining companies have begun to distinguish themselves by focusing on value-added services.
"In today's market, there is certainly no shortage of companies who will sell you a thermal transfer ribbon," stated Derek West, director of sales and marketing for Union Chemicar America (UCA) (Lake Forest, CA). "VARs should look for a manufacturer who offers the right products at the right price while providing ongoing channel support. This support includes: educational programs/training, lead-generation activities, and allocating the resources necessary to help support the VAR's sales and marketing initiatives."
According to Harrison Chien, director of sales and marketing for Sony Chemicals Corp. (Mt. Pleasant, PA), VARs should ask TTR vendors the following:
- Is the vendor committed to this market for the long term?
- Will the vendor help you obtain your market share goals?
- Will the vendor help you increase revenues and profits?
- Will the vendor partner with you on new product development?
- Will the vendor help you reduce product, service, and process costs?
"Competition has been forced to change due to the sluggish economy and price compression," Chien explained. "The bar code industry is in a market fulfillment mode right now. We need to evolve into more of a market development mode. This will only happen when we start to use more research and development efforts to open up nontraditional thermal transfer opportunities."
TTR Manufacturers Need The Channel
All of the vendors interviewed believe the channel is crucial for fostering growth in the TTR market. This is a refreshing change for VARs since many hardware manufacturers have increased their direct sales efforts in the past few years. "Without the relationship of the channel to the end user, TTR manufacturers could not even function," Cameron admitted. "Forget profitability - no TTR manufacturer has the bandwidth to handle direct distribution."
West even went so far as to say that it is not feasible for TTR manufacturers to attempt to develop the in-house knowledge and expertise required to succeed in multiple, new vertical markets. "Little brand awareness exists for thermal ribbons at the end user level," he stated. "Instead, we find that the loyalty is to the channel rather than the manufacturer and is largely based upon the quality of the service provided."
Chien's comments echoed those of West and Cameron when he acknowledged that bar code media vendors have limited sales resources and must rely on the channel for new business opportunities. "The channel is important because of the sheer size of the end user market," he said. "Remember, there are still many end users that are not aware or do not understand the benefits of bar code technologies. Therefore, I believe the small- to medium-sized companies are fertile ground for bar code media business development."
Trends In Bar Code Media
Harsh environment labeling and flexible package labeling are future growth areas for TTRs. In each of these areas, end users have been faced with compliance labeling initiatives that require the printing of high quality graphics or bar codes.
"Thermal transfer ribbons are integral to producing a scannable image, allowing customers to reap the benefits of automation," Mandrycky said. "By understanding the differences between types of ribbons, VARs not only assure high scan rates, they can also avoid over-specing, which leads to lost business down the road."
Bundling ribbons and labels is another opportunity for VARs selling bar code media. Many ribbons can be custom-matched to correspond with a particular label size. This customization allows the customer to change both the labels and ribbon at the same time, reducing machine downtime associated with roll changes.
"Thermal transfer is expected to be the print technology of choice for industrial labeling applications for many more years," West said. "The successful VARs will be those offering a complete AIDC solution including the media. After all, consumables generate an ongoing revenue stream and help to balance the ups and downs of hardware and systems sales."