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Spring 2005 Getting Good Ink

One might say Carey Porcher has ink on his hands, on his mind, and in his blood. How it got there isn’t the story: the story is how and why his company, Island Ink-Jet Systems, Inc., is so successful.

Porcher, founder and CEO, has a background in international business. He has certification in resort management. His business interests during the 1990s included a lakefront hotel in Pokhara, Nepal; a textile manufacturing facility in Katmandu, Nepal; and a 200-seat Canadian restaurant in Ludensheid, Germany; all of which took him through 28 countries. But the decade wound down on a domestic note: the end of 1999 found Porcher making ink-jet refill kits in a British Columbia garage.

Now, just six years later, the company has 800 employees, 208 regional shopping-center locations, another 600 franchise locations pre-sold—and annual sales that recently surpassed $25 million. With Armin Sachse, Island Ink-Jet’s president who joined the company in May 2001 as the first Area Developer in Ontario (where he opened 42 Island Ink-Jet stores), Porcher turned his one-man enterprise in a garage in Canada into the fastest-growing inkjet products company in North America.

The price of printing

Why ink-jet ink? Because it was a growing untapped market of consumers who are frustrated with the high cost of name-brand replacement cartridges from printer manufacturers. Porcher found a way to reach that market.

Some background: In today’s electronics market, it’s not hard to find a brand-new color printer for under $50 that comes with starter cartridges. But until they run out of ink for the first time, many buyers don’t realize that compatible replacement cartridges can cost almost as much as that printer did.

Why so expensive? “Because they can be,” says Porcher. Faced with tough competition, manufacturers drop prices on many printers to below-profit levels and make up the difference with high-markup cartridge sales. “Until recently, consumers had no other option but to purchase expensive original cartridges,” he says. “It’s a controlled business environment, often perceived as a monopoly.” In recent years, as color printers made their way into many American homes and small offices, the “cartridge monopoly” inspired the proliferation of Internet-based companies offering $19.95 do-it-yourself refill kits as an alternative to buying a new $40-$50 cartridge. But the kits were often of low quality, leaked ink, and created more frustration than the $40 price tag of a quick, clean, snap-in cartridge. Enter Island Ink-Jet.

Island Ink-Jet created not just a “better mousetrap,” but a new operating model for inkjet sales: a network of mall-based kiosks that sell a broad range of ink jet and laser products, easy-to-use refill kits for brands such as Canon, HP, Epson and Lexmark—at a fraction of the manufacturers’ prices—plus reliable on-the-spot cartridge-refill service.

Every Island Ink-Jet kiosk carries 120 types of ink specific to cartridge types, to ensure the best performance. Customers can save 40-60 percent of the price of original brand-name cartridges (for example, $23.99 vs. $37.99), and up to 90 percent with a take-home refill kit at $4.95. An on-the-spot refill, including testing, is $13.99.

Tony Elwell, an Island Ink-Jet franchisee who operates a kiosk in Marlborough Mall (Northeast Calgary, AB), says customers are angry about the high cost of branded replacement cartridges, and believes they’ve been waiting for somebody to fill this market niche and meet this need. “They think we’re a godsend,” he says. “They keep saying, ‘It’s about time somebody opened a shop like this.’” One of his regulars tells him, “The reason I keep coming here is because I’m sick of paying $40, $50 or $60 for cartridges. It’s almost like the printer has become a throwaway item. The cost of the cartridge is more than cost of the printer—and the printer already comes with cartridges.”

Raising the stakes

imageFaced with growing competition, especially from Net-based refill services, brand-name manufacturers devised ways of trying to prevent consumers from reusing an original cartridge. Some makers put electronic “smart chips” into the cartridge that stop it from working once it’s been recycled. Others created “stale dates,” a “time’s up” mechanism that renders the cartridge useless after a number of months.

“Large companies monopolized the market,” he says. “They dictate the rules and don’t give consumers any other options.” In fact, until recently, manufacturers would void the warranty if customers tried to refill the cartridge. “Our cartridges are compatible with specific printers, so it’s impossible that the ink refill damages the printer,” Porcher says. “Manufacturers can recommend original cartridges, but they can’t require customers to buy their brand.” Porcher compares these tactics to a car maker that forces its buyers to buy their brand of gas at very high prices instead of paying street prices at the corner gas station.

Consumers now have a viable, affordable alternative with Island Ink-Jet. Rod Krause sees it from both sides: he was a customer first, and now operates a franchise at North Hill Shopping Centre (Calgary, AB). “Customers endorse the product [and] they keep coming back for more,” he says. “The day of the $50 cartridge is over.”

Clark Harris, a franchisee at Southgate Centre Mall (Edmonton, AB), says, “Our service is convenient [and] it’s quick.” In addition to quality and low prices, another key to the company’s immediate success is its 100-percent-satisfaction guarantee. “We haven’t had negative reactions at all,” says Harris. He says the defect rate (one to three percent) is as low as or lower than the original manufacturer’s product. “[But] if for some reason the cartridge fails to work properly, we’ll refill it again for free or refund the money.”

Camera craze

Adding to the ink demand are digital cameras, and the increasing numbers of shutterbugs and scrapbookers who own them. Five years ago, digicams were a rare and expensive novelty—only tech-savvy “early adopters” bought them. Today, with numerous models of quality brand-name digital cameras well below $200, tens of thousands of US consumers are switching completely from film to digital. In fact, the Consumer Electronics Association reports that at the end of 2004, 43 million American households owned a digital camera.

Likewise, color inkjet printers were relatively pricey not so long ago, bought mostly by businesses to create color graphs and the like. But in the past few years, with a large selection of brand-name color ink-jet printers at rock bottom prices, everybody’s buying them, both first-timers and as replacements for older black-and-white printers.

Now put the two together, and you get the picture: With the arrival of digital photography came the need for high-quality color printers for the home computer. The more digital cameras sold, the more color printers sold. The more photos people printed, the more color ink they consumed.

Things really began to develop once the printer manufacturers introduced high-quality photo paper to the consumer market, plus an advanced process that allowed people to print lab-quality photos with their printers at home. And with online picture-sharing, kids, teens, adults and grandparents—baby boomers and seniors alike—are printing e-mailed family and vacation photos to frame or scrapbook or show friends. “Seniors are the biggest growing market for us in the US and Canada,” says Porcher. Older consumers appreciate not only the savings but the personal service they receive at the company’s kiosks, something they don’t find at large office-supply stores or online. “Very often they come back to the kiosk to show the printed pictures of their grandchildren and thank us for the advice,” he says.

Personal touch

imageThe opportunity to connect with a salesperson in person and top-notch service are major factors in Island Ink-Jet’s success. “People are very comfortable with us,” says Porcher. “They’re sick of calling help lines and being placed on hold. We give them the answers right then and there.”

For Porcher, the customers are the most satisfying part of the business. “[They're] almost ready to give you a kiss for a $15 sale.” He tells of a woman who stopped by to ask the price of a color cartridge refill. “That’s it?” She and her teenage daughter had been battling for months about using so much color ink for school projects. She came back the next day to thank the owner for stopping the family arguments.

Another thing Island Ink-Jet prides itself on: their contribution to the environment. “We give people the option to recycle, to do their bit,” says Porcher. The company is profitable and green-friendly. “We prove that the thinking ‘If it’s green, it’s more expensive’ is not true.”

At the current disposal rate—more than 300 million single-use cartridges a year go into landfills—in 10 years the number of discarded cartridges could fill the Grand Canyon. Plus, with the prices of brand-name replacements almost as high as the printers themselves, some consumers decide to buy a new, later-model printer rather than a fresh cartridge. What happens to the old printer? It will likely end up in the trash, on top of all those cartridges.

But a cartridge can be refilled from three to ten times, depending on its condition. “Last year alone, we recycled three million cartridges,” says Sachse. “That’s three million cartridges that didn’t wind up in the landfill.”

“Family” values

Porcher refers to the company as “the Island Ink-Jet family.” With the close personal attention given to each of its franchises, this rapidly expanding “family” deserves the nickname. Plus, many Island Ink-Jet retail locations are family-owned enterprises, and some of those families manage three or four franchises in different locations.

Owning an island Ink-Jet franchise isn’t just about plunking down a franchise fee and setting up shop, though. Every new franchise candidate spends two weeks at Inky’s Nest, Porcher’s beachfront retreat on Vancouver Island, for training. Hosted by Porcher, his wife Kathy and their five children, these gatherings aren’t just a day at the beach, though. Because of the company’s high standards for quality and emphasis on top-notch customer service and satisfaction, the training program is fairly rigorous. Before they’re awarded a franchise, trainees must learn the technique of refilling different types of cartridges with 120 different types of ink. And each trainee has to pass a final exam. But after each long day of hands-on training, they get to enjoy all of the estate’s amenities, such as barbecues, hot tubs, guided tours, in-house movie nights and more. “We have a very open style when it comes to the corporate culture,” says Porcher. “We all work together—it’s not a ‘them and us’ exercise.”

A big part of a successful franchise operation is ensuring that individual retail outlets work closely with the head office. According to Sachse, formerly VP of marketing and sales at six operating divisions of GE Capital CEF, a successful franchise is about offering a good quality product and service with a 100-percent-satisfaction guarantee. “We put quality control at the franchisee level,” he says. “Our guarantee is ‘If you don’t like it, here’s your money back—now let’s try to solve the problem.’ And that’s the level of customer service that is really missing in business today.”

Liquid gold

Porcher and Sachse kiddingly refer to ink as liquid gold: “If you look at the most expensive liquids in the world and compare the price of champagne, cologne and our product, ink comes first at five times the cost of Dom Perignon champagne,” says Sachse. And like that venerable wine, their liquid gold is going global: the two are planning a large-scale expansion into Europe, starting with the UK, Germany and France.

Porcher and Sachse have already begun talks with potential partners in western Europe, where the market is untapped and offers huge potential for growth, especially in countries with strict environment-protection laws, like Germany or Austria.

Expanding to Europe makes sense to Peter Garrod, a franchisee in Erin Mills Mall (Mississauga, ON). “We have a product that’s needed, it’s environmentally friendly, [and] people don’t want to be spending $60 to $120 on a cartridge,” he says. “I think this is a worldwide proposition, not just North America. I can see this expanding into Europe. I don’t see why not.”

Why not indeed. Says Porcher: “We have the right product at the right time, and we’re here to stay.”


Kasia Dawidowska

Dawidowska writes frequently for both trade and consumer magazines. She can be reached at .

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