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The Dealer Channel

Profiting in the Future
 
To be successful in today's competitive environment, BTA dealers must face enormous challenges. The structure of the industry has changed dramatically over the past ten years, forcing dealers to adapt and evolve rapidly. Many of the dealers that have not addressed these challenges are now struggling to survive. As one dealer succinctly put it, “The greatest challenge for the dealer today is making a profit!” While turning a profit has always been the goal for all participants in this industry, it has become increasingly difficult due to declining copier volumes, margins, and service revenues.

To assess how office equipment dealers are faring and what they are doing to face today's challenges, CAP Ventures teamed with imageSource Magazine to conduct an extensive survey of the dealer business. This CAPStat provides a glimpse of one of the key areas covered in the survey – revenue and profitability.

Revenue and Profitability

To determine how dealers were doing regarding revenue and profitability, CAP Ventures asked dealers to break down their revenue by category. The results are represented in the chart below. 

Survey participants indicated that 33% of revenue was hardware, 29.2% was supplies, and 30% was service. Only 7.8% of revenue was attributed to software, support, and professional services. This mix indicates that dealers are still highly dependent on the traditional copier model of hardware, services, and supplies.

A declining installed base, in conjunction with CAP Ventures' forecast of little or no growth in the copier market over the next five years, makes it obvious that a higher percentage of revenue must be derived from software, support, and professional services. If this does not occur, companies will find it difficult to achieve revenue growth and profitability.

The preceding analysis is an excerpt from CAP Ventures’ research report The Dealer Channel: Are They Making the Transition. To learn more about the report or to make a purchase, contact Alison Hipp at ext. 126.