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Lexmark Data Shows China ‘Bouncing Back,’ As The Printer Helps Partners Pivot

Lexmark Vice President of Worldwide Channel and OEM Sales Sammy Kinlaw outlines the ways the company is helping its partners manage sales during the coronavirus pandemic.

Lexmark said while global sales have hit a rough patch due to the coronavirus pandemic, there appears to be a light at the end of the tunnel in terms of what their own data shows about the recovery in China and the Asia Pacific.

“China seems to be coming out of it,” said Sammy Kinlaw, Vice President, Worldwide Channel and OEM Sales, Lexmark. “We’re managing, of course, our toner usage and our hardware sales in China. They’re bouncing back. They’re at levels to where they were before all this happened. That gives me some hope that we can get back.”

Managed print services give the vendor visibility into the market there, which Kinlaw said shows a recovery is well under way, with per-page count, as well as toner usage, peaking again to pre-COVID-19 levels.

“China was the first country to go on lock down and as expected we saw double-digit declines the last week of January and into February,” Kinlaw said. “Usage of toner gradually improved beginning the third week of February and continued throughout the quarter. By the end of March we actually saw slight growth.”

China’s Purchasing Manager Index – how it measures manufacturing output -- shows a V-shaped recovery from January to March with the index plummeting to 35.7 in February as most of that nation’s factories fell under some form of quarantine, only to hit 52.0 in March as the country began to open up once more.

However, economists have poured cold water on the numbers, suggesting that if the rest of the world is in a recession, there are fewer customers to buy what is being made, and it can take months for the numbers to accurately depict a recovery.

Kinlaw concedes that there are “many variables at play,” however in a news cycle dominated by gloom, it is a rare bright spot.

“There are so many variables at play it’s really hard to link downward trends and recovery in other geo’s, but I do recognize that after roughly 10 weeks of downward trends we finally bounced back to growth in China,” he said. “It’s the best news I’ve seen. Toner usage is back at near normal levels and hardware sales are absolutely trending back up.”

However, Kinlaw cautioned that while there could be good news on the horizon, VARs must guard against being consumed by the challenges to their business right in front of them.

“Pivot or die is where we are,” he said. “You have to plan for the future, but if you don’t get these folks up and running and create an opportunity for them to get some points on the board, they’re going to die.”

With that in mind, Kinlaw said, Lexmark is offering 60-day terms instead of the usual 30 day terms for the forseeable future, calling it the “most important” item the company could offer its partners.

“That means it gives them more time to collect from the end users they’re selling to. Perhaps they could preserve their cash for an extra 5, 10, 30 days and hold on to it so they have it to pay their bills. That’s an option for them. The other alternative, is perhaps they want to give their end users 60 day terms, because of the circumstances their own customers are in.”

For the print vendor itself, Kinlaw said he remains focused on building the number of partners it has. In 2019, the company grew its number of buying partners by 40 percent.

“I’m not done with that,” he said. “I think for Lexmark to not only survive, but to thrive in this environment, you have to have lots of partners buying a few things. We need small VAR.”

The company is offering new VARs 10-percent off of its entry-level Go Line products which are lighter, more portable, and designed for the micro-SMB environments.

Lexmark this week also launched volume delegation meaning the more partners buy, the deeper discounts they can get from the manufacturer.

“So as their quantity grows, their discount increases,” Kinlaw said. “Lexmark has not offered anything like that before. The intent is to incent our partners to look at us, when there are selling opportunities. When they sell more, there is more discount associated.”

He said there are additional discounts for VARs selling into the government vertical for the second quarter. Lexmark has about eight weeks of inventory on the shelf at various warehouses and it has arranged unique deals with each distributor.

“Just to create some excitement,” he said. “To create some life and to get these folks enabled and incented to sell. It’s a weird dynamic we’re in. Healthcare, government. That’s actually doing well. At the same time, you’ve got the companies we’ve typically sold into, the restaurant industry, retail where we are strong, and those doors are shut.”

Kinlaw said apart from the government and health care verticals, the outlook for 2020 remains hard to gauge.

“I usually feel like I can figure out the trends and I understand the verticals,” he said. “I’ve been able to tell where Lexmark has opportunity and where it does not. But this is one where I’m stumped. My natural tendency is to be bullish, because I know how to build coverage. I know programs. I know what to do with distribution, but I don’t know all those answers at the moment. I’m unsure outside of health care and government when and how much spend will resume.”

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