Pelikan is in Trouble

[DrScholl]

  On 8/17/2021 at 4:04 AM, sirgilbert357 said:

 

You're right -- I've never heard of Van Dieman's Ink...LOL.

Expand  

You should subscribe to the excellent FPN forum and its gorgeous ink reviews, er, oh wait...

😁

[N1003U]

  On 8/17/2021 at 4:01 AM, A Smug Dill said:

 

Also, don't forget there needs to be Marketing with a capital M — making prospective purchasers aware of and interested in your product. For example, Van Dieman's Ink has long been engaged in direct retail sales via its web site, including to customers outside of Australia, but few hobbyists overseas have heard about the brand. If the company is not equipped or prepared to put the Marketing effort to raise consumer awareness and push product sales in Asia, Europe and the Americas, then it isn't going to get anywhere, unless it engages regional distributors as agents to do the Marketing locally (and, in return, take their cut of the sales revenue). Word-of-mouth and discussions on online hobbyist forums can help a little; but then, even though VDI has a few good products in its catalogue to offer, because I wasn't impressed by the company's customer service having dealt with it thrice, I choose not to review its products and give them exposure, as I have no obligation to either them or other fountain pen users to do so. By engaging regional distributors who stand to profit from sales, the manufacturers can at least be assured that some decent Marketing effort will be put in and not out of sheer goodwill or community-mindedness.

Expand  

Indeed. Good point about the distributors sometimes doing marketing as well. They do need incentive to do that.

 

Pelikan maintains a reasonably attractive corporate site for its fine writing products. The international version seems to be consistent now (at least the few languages I checked), but it appears to be just some high-level product descriptions and a sign up for a newsletter. The site is somewhat simple, but seems to be designed to make translation easier and to project a consistent image internationally. The international site does not seem all that friendly, though for folks looking to actually buy from the site.

On the German site there are some additional product details (sizes, weights, etc.) that are not on the international site, and the German site also has links to dealers (which seem to work most of the time), for those interested in purchasing. I find these links also handy for finding dealers who have current stock if I am seeking a particular model and/or color, and to do a bit of price comparison. The German site is written partially in "Denglish" (that is essentially German salted with a fair number of random English terms, for flair, I guess), So it is possible to navigate reasonably well the site without having to understand much German, and many of the dealer's webshops have at least an English side for orders.

 

My impression is that Pelikan's domestic German marketing is more organized on the corporate side, while the international effort is more disjoint. If I could find Pelikan product information and dealers as easily on the international sites as I can on the German site, it would be nice, and I wonder if it might help Pelikan to organize their international marketing efforts a little better.

 

I see a bit of correlation between Pelikan's marketing efforts and their attitudes toward international distribution, which I suppose is driven by a number of business, legal, and cultural factors.

[TSherbs]

  On 8/17/2021 at 3:45 AM, N1003U said:

 

For those who care, the basics of selling product globally as a manufacturer:

(for those who know how sales of consumer goods normally works, fee free to skip down to the last couple of paragraphs)

 

As a manufacturer selling in a global market, especially high-volume, low-price product (low-price being somewhat arbitrary, but in for this argument I would determine "low" or "high" by comparing the unit price of what is being sold to the overall cost of the sales organization required to sell it), one important marketing decision that needs to be made is: what is the best way to get my product into the hands of the end-users?

 

One option is to sell directly to retail customers. These days, it is not so hard (not trivial, but if one has a product list and some decent pictures, to build a nice webshop with current tools that handles almost the whole process, is not overly complicated (recording orders, managing inventory, confirmations, billing, payment, status tracking, etc.), and retail sales margins directly out of the factory are usually really great, so in principle anyway, direct sales is usually an option to at least consider.

The problem with direct sales that is that:

1.) you still need to have physical fulfillment facility, which is not trivial, especially at scale, and that may not be (in fact, probably won't) something a manufacturer can or wants to get involved with, and

2.) you often have all of the retail customer service issues to deal with, as well as all sorts of different legal environments and business customs to deal with, for millions of customers.

Both of these things are a huge distraction when the main focus is production.

3.) Most retail customers not only want to buy pens, but also ink, and paper (and possibly other accessories) so to be effective as a direct retailer, there is the addition of somehow managing those associated customer needs.

 

Another option is to sell via dealers. This pushes the retail hassles off onto the dealers, who also generally know the retail market and customer quite well, while the manufacturer can focus on making pens. It is, in a sense, outsourcing a chunk of the distribution chain. You give up a piece of the supply chain in order to make your life simpler. Instead of millions of customers to deal with, you now need to deal with only hundreds or maybe globally a few thousand, and the the sales per customer is much greater (and as the manufacturer, and you can, if you want, control the number of dealers either geographically or by forcing minimum purchase volumes, etc.), so you can afford to sell less expensively, ceding part of the sales margin to the dealer, who can typically spend more time than the manufacturer on the retail purchase experience to keep the end user happy.

 

Another option is to sell via distributors. Especially when selling internationally, things get even more complicated as a seller, because now one needs to deal with import/export issues, long-distance logistics, varying national laws, varying business customs, etc. At that point, it can save a lot of hassle to simply offer exclusive (usually geographic) sales rights to a distributor in a given market. This can make sense for the manufacturer in that they have now virtually completely outsourced the sales for that market, and they only have a very few "customers" to deal with in terms of delivery, billing, etc., and usually (the exact terms of the distribution agreement can vary), but all of the hassles of importing, distributing, and selling normally land on the distributor. The distributor(s) like(s) the arrangement because s/he/they do(es) not have to compete with others to sell the product in the given market.

 

Typically, as long as the manufacturer is happy with the volume of product the distributor is moving, they don't care (too much) how the distributor operates within her/his/their territory. Distribution agreements come in lots of flavors and styles, with responsibilities (including customer service, warranty returns, etc.) and standards of behavior agreed in some fashion between the manufacturer and distributor. How the work is split will, of course, have an impact on the price at which the inventory is purchased by the distributor. For example, in one extreme cases, the distibutor buys the goods at the factory dock and takes over complete ownership/responsibility at that point; in the other extreme case, the manufacturer ships inventory to the distributor on consignment, and the distributor only pays for the stock (and/or collects a commission) when it is sold, and may never even take title to the stock. Most distribution agreements I have been involved with and/or know about land somewhere in-between those extremes, and return rights, financing, price maintenance agreements, and many other items are spelled out explicitly as to who is responsible for what.

******************************************************

 

From the little I know about the Pelikan/Chartpak agreement (which is more than nothing, but not a whole lot), it is closer to the former extreme than the latter (i.e. Chartpak are more a re-seller than a commissioned agent), which makes life easy for Pelikan, as long as Chartpak keeps moving enough product to keep Pelikan happy, and Pelikan doesn't care (all that much) about the retail pricing in Chartpak's territory. Pelikan cares only about overall sales volume. How this relationship between manufacturer and distributor might impact the retail customer, I leave as an exercise to for the reader. Why and if grey market trade between the EU and N. America in particular is a concern to Pelikan, I also leave as a point of discussion.

 

It has been touted here that Chartpak recently changed their policy towards the service of gray-market pens and will now honor the warranty on all genuine Pelikans (i.e., as long as the warranty claims are on pens purchased from an authorized Pelikan dealer somewhere). It has also been observed that Chartpak is also since recently no longer handling warranty repairs themselves and instead outsourcing warranty repairs. I leave it as an additional exercise for the reader as to why those two changes might very well be related (hint: why don't automobile dealers complain too much about doing customer warranty work?).

 

Expand  

Thanks for this.

[N1003U]

  On 8/17/2021 at 1:32 PM, TSherbs said:

Thanks for this.

Expand  

I hope it helps.

That is a geostationary orbit (36000 kilometer/22000 mile) view of the issue, and the details get much more complex (and never mind that few folks here are privy to any of the Pelikan relevant details). There are entire university courses taught on the subject of commercial/industrial marketing, but I hope there is enough in my post to help frame the discussion a little and give a little background to those who are interested generically in how products are typically sold globally.

 

There are always inherent risks in any business, and in a small niche of what is essentially the luxury business of fine fountain pens, the risks are probably above average.

[Parker51]

  On 8/17/2021 at 4:01 AM, A Smug Dill said:

 

Also, don't forget there needs to be Marketing with a capital M — making prospective purchasers aware of and interested in your product. For example, Van Dieman's Ink has long been engaged in direct retail sales via its web site, including to customers outside of Australia, but few hobbyists overseas have heard about the brand. If the company is not equipped or prepared to put the Marketing effort to raise consumer awareness and push product sales in Asia, Europe and the Americas, then it isn't going to get anywhere, unless it engages regional distributors as agents to do the Marketing locally (and, in return, take their cut of the sales revenue). Word-of-mouth and discussions on online hobbyist forums can help a little; but then, even though VDI has a few good products in its catalogue to offer, because I wasn't impressed by the company's customer service having dealt with it thrice, I choose not to review its products and give them exposure, as I have no obligation to either them or other fountain pen users to do so. By engaging regional distributors who stand to profit from sales, the manufacturers can at least be assured that some decent Marketing effort will be put in and not out of sheer goodwill or community-mindedness.

Expand  

You indirectly referenced another possible player in the sales equation, the advertising agency. In my readings on the history of advertising and marketing as the root of propaganda, part of my study of human decision making and heuristics, I came across an interesting example of how an advertising agency during the beginning of branded merchandising in the USA turned the client relationship on its head in regard to profit and wealth accumulation. This agency started out with a contact with a regional manufacturer of canned baked beans  and was so successful in promoting the product that it became the leading national brand of canned beans while bringing in more profits for the agency than the manufacture was making. When there was a market downturn it looked like the bean company would go under. The advertising revenues would have ended, so the advertising agency loaned the capital needed to tide the bean company over the market downturn and they both prospered. 
 

Pelikan clearly does not advertise enough to create that type of situation and pen sales are a lot lower volume product than canned beans, but as one furniture store owner I knew said, it is always possible to buy sales, if you price your product low enough and advertise, the question is can you make a profit. 

 

Perhaps Pelikan needs to renegotiate with Chartpack their contact if Chartpack is profitable while Pelikan is not. Chartpack is in the position of that advertising company I referenced . If Pelikan can’t kept making pens, Chartpack can’t sell them and there goes any profit from that part of their business.

 

 

[1nkulus]

As a customer, two things matter i.e. can you get a better price elsewhere and how hard is it to avail that price.

 

OTOH, Chartpak are able to find enough customers at their pricing levels else they would have shut shop.

The savvy ones are importing from Europe.

 

I doubt Chartpak would have changed their warranty policy in July 2020 without a nudge from Pelikan.

Now, there is no reason to refrain from making an European purchase and as I stated before; it is Chartpak's loss.

 

 

[1nkulus]

  On 8/16/2021 at 3:00 PM, A Smug Dill said:

 

Not specifically with regard to Pelikan, but I've certainly read in hobbyist forums — such as FPN — comments by more than one, two or even dozen of would-be buyers of (say, gold-nibbed, irrespective of whether they're entry-level) Pilot, Platinum, and/or Sailor pens not being comfortable importing from Japanese sellers, either via marketplaces such as eBay or Rakuten (Ichiba, or even the now-defunct, English-language Rakuten Global Market back when it was operating) or independent online shops (e.g. Pensachi, Nagasawa Stationery Center).

 

From what little I know of prevalent European consumer law (i.e. what retailers tell me, through their policy statements or otherwise) and seen of American retail practices, I suppose one thing that can make European and/or US-based buyers wary — where Australian consumers generally wouldn't be, due the ‘limitations’ of our consumer law — is that no-questions-asked returns may not be an entitlement, and, ”I just don't like the pen,” ”it writes but writes too dryly for my tastes,” ”I'm not happy with the pen's performance even though I cannot specifically pinpoint where it doesn't deliver on the published product specifications and guarantees,” aren't automatically accepted as valid reasons for return for exchange or full refund, let alone getting one's international return postage either taken care of upfront or subsequently reimbursed by the overseas retailer. The individual buyer's satisfaction and/or happiness with a purchase s not the criteria for whether the seller has fulfilled its side of the bargain and discharged its commercial obligations.

Expand  

Foreign transactions can be tricky especially for used pens.

For new pens, the retailer can check prior to dispatch. If you are dealing with known sellers, then they are used to foreign transactions and will ensure a satisfactory pen.

OTOH, dealing with European retailers is easy.

 

If I 'did not like the pen', I would expect postage to be deducted from the refund apart from incurring postage to return it to the retailer.

Hence, I wouldn't buy a pen beyond a certain value and definitely not on a whim, owing to returns.

[a m a r g o]

  On 8/9/2021 at 3:23 PM, N1003U said:

Speaking at least for the USA, in the last tariff schedule I looked at, the import duty on fountain pens was something like 1.56%. I can’t imagine Mexico or Canada being much different. I am not sure tariffs are contributing in any great way to North American retail pricing or any other major financial issues for fountain pens being sold in North America. I am quite sure shipping costs are not.

 

Pelikan’s current issues may well be rooted elsewhere. From what I have seen so far, it is not even clear (at least not to me) that the root of Pelikan’s problem lies in the fine writing instruments division, or with production location.

 

What is unfortunate is that the fine writing instruments division does seem to be suffering as a result of Pelikan’s corporate problems, which is disappointing for us FP fans.

Expand  

 

Sorry to jump on it so late, but currently the import tax in Mexico for fountain pens is 15% + VAT. You can buy a regular M800 in one of the best and cheapest B&M stores for about $750 usd...

 

It's extremely convenient for Mexican consumers to buy their loved toys in online stores oversees. I simply do not understand how these places survive, why they decide to charge those prices, and who could be its clientele.

 

I stopped buying pens in Mexico almost ten years ago...

 

 

[N1003U]

  On 8/23/2021 at 2:46 PM, a m a r g o said:

Sorry to jump on it so late, but currently the import tax in Mexico for fountain pens is 15% + VAT. You can buy a regular M800 in one of the best and cheapest B&M stores for about $750 usd...

Expand  

Thank you for the data point a m a r g o. That seems not much different or even a bit more expensive than in the US, and certainly much more than in the EU. In the EU it looks like before shipping and and import costs, a good price (less EU VAT) is about US$430-450, so even with shipping costs (I don’t know about Mexico, but in the USA, shipments of less than about $800 rarely attract attention from customs officials), it makes sense to buy grey market.

 

I would really like to understand Pelikan’s marketing strategy for N. America. Maybe we just think too highly of ourselves here on FPN, and grey market purchases represent only a small fraction of N. American sales, and Pelikan is happy with the volume of product it sells into NA and with its pricing and other marketing arrangements, but is does seem somehow a bit out of balance.

[a m a r g o]

  On 8/23/2021 at 6:05 PM, N1003U said:

Thank you for the data point a m a r g o. That seems not much different or even a bit more expensive than in the US, and certainly much more than in the EU. In the EU it looks like before shipping and and import costs, a good price (less EU VAT) is about US$430-450, so even with shipping costs (I don’t know about Mexico, but in the USA, shipments of less than about $800 rarely attract attention from customs officials), it makes sense to buy grey market.

 

I would really like to understand Pelikan’s marketing strategy for N. America. Maybe we just think too highly of ourselves here on FPN, and grey market purchases represent only a small fraction of N. American sales, and Pelikan is happy with the volume of product it sells into NA and with its pricing and other marketing arrangements, but is does seem somehow a bit out of balance.

Expand  

 

I attended several of the first Pelikan Hubs in Mexico and was able to talk with Pelikan's employees that survey the 'Fine Writing Instrument' division in the country, Pelikan Mexico import and distribute the pens themselves, and was able to extract from them that they cannot 'avoid' paying the same import taxes on fountain pens as an individual must. I thought that maybe they could import a dissembled pen and only consider the nib as a 'fountain pen', hence paying less taxes. I was always curious because fountain pen prices in Mexico are extremely high in comparison with other countries, already taking into consideration the peso devaluation in any specific time frame.

 

It's obvious that is cheaper for Pelikan Mexico to import the pens, considering only bulk shipping costs, for example. Nonetheless we completely ignore how much Pelikan charge to their distributors, for example Chartpak in the USA, but we can still assume that the profit from a Pelikan M800 with a retail price of $750 usd is quite hefty; we have the European prices as a comparison point.

 

Last year I bought an M405 from a European vendor. With shipment the pen costed $220 eur and I ended up paying a total of $290 eur ($220 + 15% import duty + 16% VAT), that obviously includes the vendors costs and profits. The same pen in Mexico costs $430 eur, a whopping $140 eur difference. If we consider the disparity in costs between Mexico and Europe, and adding the difference between list price and distributor price, that disparity grows even more.

 

I certainly do not comprehend the price strategy from Mexican vendors, it's crazy, but I understand the Chartpak strategy even less, considering they have a larger and healthier market to sell to, alienating more feasible customers makes no sense. Specially taking into account that the USA's customers are more savvy and value much more their hard earned money...

[N1003U]

  On 8/24/2021 at 2:06 PM, a m a r g o said:

alienating more feasible customers makes no sense.

Expand  

 

I think this is the core of the dilemma in my mind. The only conclusion that makes sense to me is the both Pelikan and their distributor are satisfied enough with the situation, and there is not enough motivation/market pressure to change. Perhaps the demand is more inelastic than we "savvy" customers believe. Or, Pelikan and their US distributor are crazy, but I hold that for less likely.

 

  11 minutes ago, a m a r g o said:

Specially taking into account that the USA's customers are more savvy and value much more their hard earned money...

Expand  

 

I am not so sure about this because of:

1. the behavior of sellers in the US market, and
2. personal observation leads me to believe that there are a significant number of US residents who seem to think that money is an infinitely renewable resource (they might even be right, but I am not willing to bet my entire lifestyle on it, and I believe the evidence of history, some economic theory, and technical limits on rates of growth are on my side in that).

[A Smug Dill]

  On 8/24/2021 at 2:06 PM, a m a r g o said:

… Pelikan Mexico import and distribute the pens themselves, and was able to extract from them that they cannot 'avoid' paying the same import taxes on fountain pens as an individual must.

Expand  

 

Just in case I misunderstood, could you please clarify what you meant by that? Are you saying that an individual must ‘avoid’ paying import taxes on fountain pens, even when Pelikan Mexico as a business entity cannot?

 

  On 8/24/2021 at 2:06 PM, a m a r g o said:

Nonetheless we completely ignore how much Pelikan charge to their distributors, for example Chartpak in the USA, but we can still assume that the profit from a Pelikan M800 with a retail price of $750 usd is quite hefty; we have the European prices as a comparison point.

Expand  

 

Whose profit specifically? The cut (or profit margin) for Pelikan's head office? Its regional distributor? Or the retailer, to whom you pay the US$750 in exchange for a Pelikan M800? While I would go so far as to say it makes no sense to lump every party's cut together as “the profit”, as if the inevitable costs of production and shipping are the baseline, and every little bit above that which the consumer has to pay is “the profit” and best avoided (or at least minimised) from the consumer's perspective.

 

  On 8/24/2021 at 2:06 PM, a m a r g o said:

we have the European prices as a comparison point.

Expand  

 

See, that's not a fair or meaningful comparison, because there is absolutely no doctrine that says if a random consumer elsewhere in the world is able to enjoy low retail prices (i.e. in the transactions between the consumer and the retailer, never mind how many step or serial commercial relationships there are between the retailer and the manufacturer, or how many governments and logistical transport service providers are involved), then that is a meaningful and reasonable baseline for consumers globally. Australia has a 10% Goods and Services Tax (known as VAT, MwSt, sales tax, etc. elsewhere), and that 10% in Australian retail prices are neither profit for the business entities involved in the supply chain, nor something the Australian consumer can look to consumers elsewhere “as a comparison point” and then pretend that it's a reasonable goal to avoid paying that piece of the retail prices.

[Kalessin]

It's useful to remember that Pelikan fine pens make up a small part of Chartpak's business (a lot of which is business-to-business, industrial, etc), though with large (and expensive, for a business like theirs) commitment to servicing them.

 

 

[N1003U]

  On 8/24/2021 at 4:40 PM, Kalessin said:

It's useful to remember that Pelikan fine pens make up a small part of Chartpak's business (a lot of which is business-to-business, industrial, etc), though with large (and expensive, for a business like theirs) commitment to servicing them.

 

 

Expand  

That is also a good point. On the other hand, Pelikan could (and occasionally maybe should) reasonably ask themselves if they think they are getting good value from their current distribution arrangements.

 

To the point quoted above, I would argue, at least from public evidence, that Pelikan is satisfied with their arrangement with Chartpak, and it could very well be that fine writing instruments is such small part of the business that it isn’t a huge priority.

[Parker51]

Perhaps I can give a business example which helps explain the seeming illogical pricing.

 

I had a neighbor who worked for a major shareholder owned utility buying steel.

 

Her job was initially to put out for bid contracts. There was a problem, their were a limited number of qualified providers, typically their were few bidders and so the prices bid were quite high. The solution, she was given a new task, recruit new providers. For several years she traveled near and far making contact with and educating steel fabricators. She walked them through the required certification processes. She linked them to suppliers and experts who could help them become bidders. The result, more bidders and lower cost steel for her employer.

 

Pelikan is in contrast to a very large multbillion  dollar revenue company very small. They are however in the same position of likely not having a large enough pool of potential providers, not obviously of steel in this case, but of potential distributors which meet their criteria in the different markets they seek to sell their products in. This means when they invite potential distributors to bid on the contracts for distribution they get little response, limited competition and thus high cost. A solution that at least in the short term Pelikan does not have is to hire and pay for experts in the different market areas to help recruit potential distributors nor the capacity to set up their own distribution network. And so the cost of this market problem is passed on to consumers.

 

I want to add, many businesses in many different fields use their staff to assist others up and down the line to facilitate better sales for themselves by helping others even those they don’t supply or get product from to make the conditions for their company better in the market segment they sell a product or service. My own brother worked as a Potato specialist for a major US food distributor. He sold nothing. He instead visited existing and potential customers and helped them with their potato problems as well as suggested ways they could include more potatoes in their product offerings. In his case the result was a significant increase in Potato sales with consumers getting better prepared Potatoes and restaurants saving money on reduced waste.

 

So, if there are any International Business consultants out there who like Pelikan pens, I suggest you contact Pelikan and offer your help as it appears they need it.