DITTO MARKET : Westlake Village Company Gives New Life to Used Copy Machines
Take a good look at the picture above. Would you buy a used photocopier from this man?
Plenty of other people have.
Ron Lydick is chairman of Equipment Brokers Unlimited, a Westlake Village company he claims is the nation’s biggest retailer of previously owned copiers. Begun in 1979, EBU buys copy machines from dealers and leasing agents who get stuck when a client doesn’t renew a lease or reneges on it.
Most copy machines have a life expectancy of seven years. The ones Lydick buys are 2 to 4 years old and usually have cosmetic defects like cigarette burns, stains or a missing lid. All are made by Xerox, Eastman Kodak or IBM.
EBU hires free-lance mechanics--former Xerox, IBM or Kodak technicians--for $60 an hour to get the machines in working order. EBU’s back room looks like a copier graveyard, with rollers, lids and other machine innards scattered around the floor. Lydick undercuts the original manufacturers by reselling the used copiers to corporations and copy shops for up to 60% less than the price of a new one--or between $3,000 and $75,000 each.
Lydick only deals in large, high-speed copiers used by corporations that need to make up to 1 million copies a month. Most are the size of a dining room table.
Besides offering a lower price, Lydick knows that Xerox, Kodak and IBM still offer service policies to those who buy used copiers. Xerox, for example, has a 7-year guarantee. As long as the machines meet industry specifications, Xerox, Kodak and IBM will fix them under the terms of their service contract and EBU is off the hook.
“That’s really been one of the big keys to the success of our program,” Lydick said.
‘Trouble for Us’
EBU’s success has come to the attention of its bigger rival. “I don’t want to talk about them,” said a local Xerox sales representative. “They’re trouble for us.”
But EBU president David Marder said the major copy manufacturers offer warranty service because there is a profit to be made. A copy manufacturer can expect at least $100,000 in revenue from a service policy over the life of a used copier, Marder said. “I don’t care if you get a new machine or a rebuilt one, you’re going to see the repairman out there every single week,” said Marder.
For the nine months ended Dec. 31, Lydick said EBU had $3.8 million in sales and net income of $105,000. The company is owned by Lydick, 39, and Marder, 30, who say they pay themselves more than $100,000 in salary each, and have used company funds to buy a Mercedes-Benz and Porsche Targa.
The company and its 20 employees are scattered around seven offices--Westlake Village, Atlanta, Chicago, Dallas, Denver, New York and Charlotte, N.C.
The used copier market goes back almost as far as the invention of the machine itself in 1960. But, until recently, most used copiers were sold out of people’s garages or by word of mouth, Lydick said.
EBU’s biggest obstacle is overcoming the copier’s reputation as the most despised piece of equipment in the modern office. Add “used” to that and a lot of companies run the opposite way, Lydick said.
“I initially heard used copy machine and I thought it sounded like hell,” said Elizabeth Weiner, a regional construction coordinator for American Adventure, a recreational vehicle park in Los Angeles. But she didn’t like the $65,000 price for a new machine from Kodak. EBU said it had a similar, used machine for $40,000. She bought it in June and has since bought two more machines. “These machines work absolutely no better and no worse than a new machine,” Weiner said.
Just about every kind of business has bought from EBU--from Giorgio on Rodeo Drive to Vons Grocery Co. in El Monte.
EBU can undercut the big manufacturers because broken-down copy machines are cheap and it doesn’t cost very much to fix them. Lydick said he can buy a broken, high-volume copier for $4,000, spend $2,500 to repair it and then sell it for $20,000.
“We make more profit the worse the machine looks coming in because we’re able to get it for less money,” he said. “Any machine is fixable.”
Now that some of the manufacturers are starting to sell used machines as well, the used copier business is growing. “It’s easily a $100-million industry,” said Lou Slawetsky, president of Industry Analysts Inc., a marketing firm in Rochester, N.Y. But EBU says it has only one local rival--Total Copy Systems in Paramount.
Share of Lemons
EBU has bought its share of lemons. “We deal all over the United States so, 98% of the time, we don’t see the equipment we’re buying,” Marder said. “We’ve bought machines that, when they show up, it’s obvious they’ve been in a fire. We plug it in and smoke is coming up from the machine.”
Other copiers need a lot of work. “Machines have shown up that have been dropped,” Marder said. How do you drop a 3,000-pound copy machine? “Off the side of a moving van,” he said.
Lydick--who wears an 18-karat Rolex, 14-karat gold chunk of a wedding ring and 14-karat gold bracelet--wasn’t always so well off. Both Lydick and Marder, former Xerox sales representatives, are enjoying going up against their former employer. Lydick started EBU with $25,000 by taking out a second mortgage on his house. Marder started his own used copier business and, in 1986, agreed to merge with Lydick and EBU.
One of the reasons for their success, Marder said, is that “Xerox has a very arrogant attitude. Then we sign a contract with the customer and Xerox comes in on its hands and knees. The customer usually throws Xerox out” the door.
How does EBU make its copies? “We use whatever is up and running,” said Marder. “Buy new?” asked Lydick with disgust. “We’d never buy new.”
