Jump in sales for print supplier TonerServ
By Loralee Stevens, Business Journal Staff Reporter
SANTA ROSA — Santa Rosa-based American TonerServ Corp., a consolidator of independent printer supply sellers, reported second quarter revenues of $7.4 million, up from $2.8 million for the same quarter last year, a jump of 166 percent.
During the first quarter 2009 revenues were $6.4 million.
The company’s net loss declined from $1.3 million in the second quarter of 2008 to $568,452 this year. President and CEO Chuck Mache said American TonerServ is very close to cash flow positive.
Founded by Santa Rosa businessman Dan Brinker, the company pursues a double strategy of acquisitions and growth through its own sales team. During the last three years it has acquired eight independent compatible toner cartridge sellers, all established companies in strong regional markets with sales of $1 million to $20 million that wanted to expand but lacked the resources.
American TonerServ provides them with Web-enabled, back end office services and sales and fulfillment mechanics, freeing their teams up to concentrate on growing their customer base.
“Our goal is to be the Hewlett Packard of compatible toner cartridges,” said Mr. Mache. American TonerServ is currently the leading independent supplier in the U.S.
The down economy threw a road block in the company’s expansion plans, but Mr. Mache has used it as a selling tool. People are looking for ways to lower costs, he said.
“We can sell a cartridge like the popular HP 42X model, which HP sells for $224 and big box stores for $200, for $170 a unit. Once our cartridges have proven that they’re equal in quality to HP’s, our sales team can sell other products and services,” he said.
American TonerServ sells more than 20,000 cartridges a month, mainly to small to mid-sized financial services, law, accounting and insurance companies and medical groups, all of which do a lot of printing. The company has several large customers as well, including a hospital chain.
Since 1990, sales of laser printers have caused the amount of printed material to soar; imaging supplies now account for upwards of 60 percent of office expenditures. The market for repair and service has reached $6 billion in the U.S. and is growing.
OEMs, dominated by HP, have 75 percent of the service, repair and supply market, but the remaining 25 percent controlled by compatible sellers is still significant enough for the OEMs and big box retailers to covet. Through advantageous rebating programs with retailers and denial of service contracts to independents, manufacturers are constantly exerting pressure on the compatible market.
“The profile of the companies we acquire, and the sales people we hire, includes a passionate belief in the benefits of compatibles,” said Mr. Mache. “That kind of motivation is what’s allowing us to survive and thrive during economic hard times like this one.”
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I have been watching this company since it’s inception and have been very impressed with its’ growth over the last year. It appears that management now has a firm grasp on what needs to be done in this growing marketplace.There seems to be a huge potential for growth that can be taken from the major players once this company establishes a very competative price point and shows that it offers a product that works as well as the OEM. Good luck and good selling. I’ll be watching for future investment.
by Garry Goodman