Whether it is a short downturn or an extended recession that spans a few years, it’s going to be crucial for marketers to ‘think outside the box’. A slump in the economy has lead a lot of people to look for ways to increase the serious cash flow by starti
Whether it is a short downturn or an extended recession that spans a few years, it’s going to be crucial for marketers to ‘think outside the box’. A slump in the economy has lead a lot of people to look for ways to increase the serious cash flow by starting a new and a safe business. When you look to venture into a new business you should be convinced with the fact that your product or service will not be hampered, no matter what the economy is doing. One of the most effective recession tools is to opt for an ink cartridges refilling business as it incurs maximum benefit at minimal cost because no matter how worse the scenario is companies still need to do printing. Not only do companies need to do printing, but in a down economy they will be looking at ways to save. And refilling cartridges is a lot cheaper than buying new ones. Both of these points make this type of business a great option. And further, to maximise your chances of success in the quintessentially chosen business is by following a proven franchising business model, as one gets immediate brand recognition. And talking about brands in the sector of cartridge refilling, Cartridge World tops the list.
“With over 1700 stores spanning across 51 countries, Cartridge World is the single largest retailer of cartridge refilling services and one of the fastest growing franchise businesses in the world today,” says Naveen Rakhecha, CEO, Cartridge World (South Asia). At Cartridge World a printer cartridge can be refurbished and refilled for approximately half the price of a new one, providing substantial savings with output as good as new. Additionally, refilling the cartridge supports local communities by reducing waste and protecting the environment as well as creating local employment opportunities as opposed to importing new cartridges.
Today, it is the world’s largest retailer of printer cartridge refilling services with retail revenues of more than $500 million worldwide. Cartridge World works on the unique concept of ‘refilling’ printer cartridges with guaranteed ‘as good as new’ performance, savings and a process encouraging reuse, thereby saving the environment also.
In addition to providing refilling services which is the core business, Cartridge World’s more than 1700 stores worldwide deal in original manufacturers’ cartridges for inkjet printers, laser printers, fax machines and photocopiers as well as additional supplies for fax machines and copiers.
Cartridge World was recently named the No.1 Toner Replacement Service franchise and was included as one of the Fastest Growing Franchises in 2004 and 2006 according to Entrepreneur magazine. AFL Pvt. Ltd. the leading logistics, cargo and courier company is the master franchisee for Cartridge World in India, Sri Lanka, Nepal, Bangladesh, Bhutan and Maldives.
Cartridge World India has recently won two awards - the “Best Business Concept of the Year” award at Franchise Award – 07, instituted by Franchise India Holdings and the leading magazine The Franchising World and the “New Concept in Franchising” award at the Indian Franchising Awards-2008, organised by Franchise Association of India.
Cartridge World recently added one more feather to its cap by winning “Best Business Services Brand” award at the Franchise & Star Retailer Awards-2008, held by The Franchising World magazine.
Spreading its wings:
Currently Cartridge World has 60 stores operating successfully across 29 cities in India viz. Delhi, Gurgaon, Jaipur, Varanasi, Lucknow, Jammu, Noida, Kolkata, Ranchi, Guahati, Indore, Bhopal, Mumbai, Navi Mumbai, Nagpur, Nasik, Pune, Ahmedabad, Chennai, Bangalore, Hyderabad, Cochin, Coimbatore, Vizag, Hubli, Malda, Pondicherry, Shillong and Baroda. “After a successful foray and good response, we are planning to make our presence stronger in all tier I, II and III cities in India and enter the tier I cities in Sri Lanka and Nepal in the year 2009 – 2010,” says Rakhecha. We also aim to open 250 retail stores of Cartridge World by 2011 across the Indian sub-continent, he added.
Recession-proof industry:
As per industry estimates the total size of printer cartridges market in India is about Rs 3,000 crore, growing at about 20 – 25 per cent YOY (year-on-year). The Indian market till recently was polarised between OEMs offering quality at a high price and the largely unorganised refill market offering cheap but poor quality alternatives. Remanufactures (largely small enterprises) who had been operating here were not ready to take the quality route as it required the management and investment bandwidth to manage change. AFL saw an opportunity here – it had credentials of pioneering new concepts and establishing global brands (like DHL and Western Union) in segments, which were largely unorganised. It found an able partner in the global leader in retailing of cartridge refilling and remanufacturing services viz. Cartridge World.
“Our franchisees have done very well and recession has helped us, as more and more customers are opting for our services,” informs Rakhecha.
Recession has helped the industry’s cause as corporates are taking all possible cost cutting steps. The aftermarket industry needs to capitalise on this opportunity by delivering comparable quality and after-sales-services and establish themselves as reliable vendors.
Green consumerism across industries is a growing phenomenon. Serious players who invest in customer education and have strong fundamentals will stand to gain from this. Growing computerisation, low cost entry level printers, growing internet usage and multifunctional printers (MFPs) will continue to fuel the demand for printer cartridges.
Global leader with local face:
The Cartridge World concept is an all weather business concept simply because customers would want to save money without compromising on quality all the time. Having entered the market in India 2.5 years back the timing of the current economic slowdown has come as a boon to them as the compelling proposition of saving without compromising on quality gets even more accentuated during these times.
The company understands that the key to effective marketing lies in adopting a local face. Their franchise model ensures that they appoint a local agent who has an understanding of local needs, being one from within, he communicates with locals in local dialect and effectively too. The company backs products with a 100 per cent money back guarantee. This coming from a global leader with a local face is very reassuring. Their first two and a half years in India have been successful, as customers who came to them were retained by them with a failure rate of less than 1 per cent.
To further establish their retail presence they would announce certain innovative distribution models as an extension of the current franchise system, soon. Their store design is an Indian adaptation approved and appreciated by Cartridge World global headquarters. This ensures that they are also able to effectively respond to the diverse small-format retail space available in the country.
Training & franchise advantages:
The Cartridge World global training programme has been modified and adapted to address the Indian market requirements very successfully. In most parts of the world the stores are run by husband-wife combination from refilling to retailing who go through a 12-day classroom training in Mumbai. However, in India, entrepreneurs hire staff as technicians who are mostly undergraduates. They have responded to the challenge by establishing a local training centre accredited by Cartridge World global training team, designing two separate training programmes, one for the owner and their sales staff (6 days classroom) and one for the technicians (1 month programme with 12 days classroom) and inducting trainers with vernacular skills.
A Cartridge World franchisee can look forward to take advantage of the brand name, as it is a well-established international brand with business systems that have been proven internationally and nationally. Cartridge World assures the Business Orientation and Technical Training programmes. They offer a two week technical training programme conducted at their state-of-the-art learning centre in Mumbai for two technical staff and one franchise owner and they also offer a one week business orientation training programme for two managerial level staff (including the franchise owner).
Cartridge World also provides technical support that includes technical know-how and ongoing access to new developments in printing and cartridge technology. Additionally, training sessions are held in various stores on an as-required-basis. They have operational staff in hand at head office in Mumbai and at their regional offices in India to provide ongoing support.
Franchise model:
Cartridge World operates under a three-tier franchising system, whereby Cartridge World Australia appoints master franchisees who in turn carefully appoint franchisees. Cartridge World recognises that without a successful franchise system the network will not grow. Therefore, they invest considerable time and expense into their resources, training and research and development. They also incorporate all this knowledge into manuals and make these available to the franchisees to ensure their continual support and improvement.
Cartridge World has its own requisites for appointing new franchisees. The required franchisee profile must suffice the requisites of a graduate degree, a good track record in business or profession, customer service orientation and ability to invest.
The set up cost includes franchise and training fee, complete store interiors, machinery and equipment, test printers, initial inventory, packaging material and consumables, refilling workstations and infrastructure, comprehensive training for franchise owners and staff at their state of the art internationally accredited training center in Mumbai, marketing collaterals, staff uniforms, etc. There are two formats available for the franchisees for taking the franchise of Cartridge World. The format I requires investment of Rs 15 - 16 lakh and the format II requires investment of Rs 10 – 12 lakh.
Working together:
Cartridge World aims to provide its retail and corporate customers with competitive pricing and superior products, whilst developing the brand into a market leader. To have a network of sites available to the consumers, which will cater for local requirements internationally Cartridge World is looking for partners to expand further.
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Up the ladder of success:
Lured by the ROI (return on investment) benefits of the cartridge remanufacturing and refilling business, Venkatesh Srinivasan gave up his cushy job as a VP at HDFC Bank to become a Cartridge World franchisee. “I always had an entrepreneurial bug in me. When I decided to start my venture I looked at several unique business opportunities and finally zeroed in on Cartridge World as I found the brand having many years of experience and proven business systems. I also sensed a huge business opportunity owing to the large price differential that exists between OEM and non OEM supplies. The penetration levels in India are also very low vis-à-vis the global average of 20-25 per cent, says Srinivasan.”
In May 2007, he opened a Cartridge World franchise store at Malad West in Mumbai. The 600 Sq. ft store was launched with a 5 year term loan of Rs.20 lakh from SBI. Cartridge World has a tie-up with SBI to provide term loan to its retail franchisees. “The loan covers 85 per cent of the cost for starting the venture. There is a moratorium on the principal amount for the first year, so we only have to pay the interest component of the EMI.” Srinivasan says.
Srinivasan says that the store achieved an operational breakeven by the sixth month. “Currently we are doing an average of 20 units per day and growing at 12 per cent month–on-month. We expect to do over 50 units per day by the middle of next year, raking in Rs10 lakh per month with a net margin of 25 per cent.”
“Currently 50 per cent of the business comes from inkjet cartridges refilling while 50 percent comes from laser cartridges refilling. The customer base comprises of 30 per cent of home and SOHO customers who predominantly use inkjet printers, while 30 per cent are from SMBs and 40 per cent from corporates who use laser printers,” he explains.
Srinivasan says, “The first apprehension amongst the customers is regarding the quality of the cartridges. But when we show them the print results, they are convinced. The price advantage of 40-50 per cent is evident. As for warranty apprehensions, we give them a warranty to replace the machine if it’s found to have developed defects due to the use of Cartridge World services.”
Venkatesh also plans to expand to other areas in Mumbai by the end of this year.
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