Kelvin versus Goliath

TRAVERSE CITY – When David squared off against Goliath, he was packing a sling and a stone.

When Cartridge World local-franchise owner Kelvin Shaw goes up against his Goliaths – Hewlett Packard, Canon, Lexmark, Dell, Epson and other printer makers – he's armed with a common-sense, environmentally-friendly business plan aimed at providing printer ink at reasonable costs.

Shaw and his Cartridge World team take a client's empty ink cartridge and provide an identical refilled and reconditioned cartridge for a fraction of the cost of buying a new ink cartridge from the manufacturers, who have adopted the practices of cell phone and razor peddlers: Set a low price for original equipment, then make money from selling the needed service or refill.

This "give-away-the-razor-and-sell-the-blades" philosophy by printer makers got consumers complaining, and that's where Cartridge World comes in. Shaw's staff of seven cleans, reconditions, refills and re-labels the client's old cartridge and makes it ready for another client to use at a low cost.

"We refill about 3,000 cartridges a month," says Shaw, who opened his Traverse City franchise in 2005. "We recycle another 20,000 to 30,000 a year that we just can't refill. That's a lot of cartridges and ink that aren't going into a landfill."

Some companies clean and refill a cartridge while the client waits, similar to a pharmacy filling a prescription. Shaw had a different idea.

"We knew that people didn't want to wait 15 or 20 minutes to refill a cartridge," he says. "So we take their cartridge and sell them an identical one. We want them in and out in two minutes. We like to have 100 percent in and out in a couple of minutes. We respect that their time is valuable."

With 650 franchises across the U.S., Cartridge World is the largest refiller/remanufacturer of cartridges in the nation. Printer makers have tried for years to get refilled cartridges out of the marketplace because the market for refills eats into the demand for new, and so, into their profits. If you're buying a refilled cartridge at a lower price, you're not buying a new cartridge from the maker of your printer.

To protect their business, printer makers use intimidation, lawsuits and technology to thwart refilling. Some manufacturers install a "killer chip" inside its cartridges. If the printer doesn't recognize the chip, the unit won't work. And printer makers change the chips and their printer models often to stymie refilling efforts.

"Every six months or so they come out with new printer models and new cartridges," explains Shaw.

Every chip or model change by the printer Goliaths requires research and counter-thrusts by the refillers. It's an ongoing computerized battle as HP, Canon, Lexmark and others try to "out-tech" Cartridge World and other refillers.

HP ink technologist Thom Brown authored a report explaining the value of "original ink."

"HP knows that consumers have many choices when it comes to purchasing ink supplies and that some may be tempted to seek out alternative, lower-cost ink cartridge replacement solutions such as refilled cartridges … because they believe the cost of ink is often unjustified and not worth the investment," he says. "However when quality and reliability are sacrificed in the name of lower sticker prices, consumers will ultimately pay the price for inferior prints."

Brown cites a 2009 report by AC Neilsen that shows the average household spends less than $76.25 a year on printer ink, about $6 a month.

"While $6 may not seem like a lot of money, when every penny counts, don't consumers deserve as much value for their money as possible?" he asks. "HP believes customers should have the peace of mind that their printing system will continue to provide the same high level of performance, quality, reliability, ease of use and overall value over time that they've come to expect."

Over the years, the ink capacity of those cartridges has been shrinking, and some now hold only one-third or one-fourth of the ink they did a decade ago, according to Shaw. Less ink means that users must buy new cartridges, or refill old ones, more often.

Shaw's background is in sales, so when he bought the Cartridge World franchise in 2005, he had others run it while he stayed on the road doing what he thought he did best: selling.

Two years later, he turned his focus to the store itself. Sales doubled. "That wasn't me," he says with a laugh. "That was all due to my great crew."

He also credits the slumping economy with sparking a rise in Cartridge World business.

"It's been growing every year," he says. "The bad economy actually helped us because people are trying to save money. Depending on the cartridge, our prices are 30- to 50-percent less than buying new."

Cartridge World's success caught the eye of the Traverse City Area Chamber of Commerce, which named the company one of the Top Ten Small Businesses of 2010.

"The whole process … highlights what you do and emphasized to us how much we do with the community. I didn't realize that we have more than 100 non-profits that we partner with. A lot of what we do revolves around the community."

Some of Shaw's 800 corporate clients include Traverse City State Bank, Corporate Title, Members Credit Union and Cone Drive. He wants people to know that Cartridge World's services are not just for large companies, but for home printers too. "We're trying to get the word out to more residential customers," he says. "The opportunity out there is huge, we just have to get to them."

So, one cartridge at a time, the high-tech conflict between Shaw and the printer Goliaths continues.

"Five years from now we hope HP will call us to wave the white flag and say 'we give up,'" he says. But unti then? The battle continues. BN