Like it or not, printing (and maintaining a printer) is a fact of life in business, and it’s always nice to find a single place to both recycle old cartridges and buy new ones. Castle Ink retails recycled printer ink cartridges and laser toner for printers from at least seven different companies, including Lexmark, HP, and Epson. This 100% bootstrapped, husband-and-wife-run company takes used ink cartridges and refills them with new ink. Each cartridge is thoroughly tested before it is resold. Castle Ink also sells refill kits for customers who prefer to pour fresh ink into their used cartridges themselves – a messy job that’s not recommended for everyone.
As a high school English teacher, Castle Ink co-founder and CEO Lauren Elward blew through hundreds of ink cartridges printing out syllabuses and handouts for her students. Convinced there had to be a cheaper way to replenish ink, the avid recycler launched Castle Ink in 2005 out of her Greenlawn, N.Y. home. Elward and her husband, Bill, used $5,000 of their own money to hire a Web designer and launch the Castle Ink website. There was, and still is, no storefront, nor are there any additional employees. During the business’s early days, the couple kept their day jobs as a safety net.
Refurbished ink cartridges keep millions of pounds of plastic out of landfills each year, and Castle Ink is in an extremely competitive landscape populated by many small to mid-size businesses as well as big players like Cartridge World (an international company that franchises across the world). 4Inkjets and Carrot Ink are two of Castle Ink’s biggest competitors. Keeping the business entirely online has allowed the company to offer competitive pricing even as new competitors crop up. The company differentiates itself by offering a 100% satisfaction guarantee and, when customers aren’t satisfied, Castle Ink pays for return shipping. Maintaining competitive pricing has been one of the biggest challenges the company faced because a lot of dealers import “poor-quality” ink from China, which allows them to charge less. Castle Ink’s main proposition is that it offers recycled ink cartridges that are less expensive than name-brand replacements without skimping on quality.
Castle Ink’s early traction and continued success can be attributed to search engine optimization (SEO). The company has maintained outstanding rankings on Google for critical industry keywords. Effective SEO drives more than 100,000 unique visitors per month to the website. The Elwards spend no money on marketing. Competitor 4inkjets, say the Elwards, spends thousands of dollars to reach the same audience through paid search marketing and display advertising. Castle Ink doesn’t accept advertising on the site, and its conversion rate hovers around 1%. Although the number varies widely, the company usually adds an average of 30 new customers per day.
Castle Ink’s top target segment is consumers with modest disposable incomes and annual earnings; however, the company has started targeting schools and small businesses, both of which tend to have multiple printers in-house and print much more than the average home user.
In such a huge market, every printer owner in the United States is a potential customer. The Elwards say they have seen TAM estimates as high as $20 billion. Realistically, they think printer ink and laser toner represents a $1 billion opportunity.
Profitable since day one, Castle Ink’s annual revenue passed $1 million in June 2011 and is expected to do so again in 2012. The company is entirely self-sufficient and the Elwards say they would only seek financing if they decided to franchise or “branch out.”
Pricing varies depending on the make and model of printer. For example, cartridges for an HP Color Copier 100 could cost $16.95 for color and $11.95 for black ink. A replacement black ink cartridge for a Canon FAX B150 printer could cost as little as $18.95.
As the Elwards plan to continue to expand in the business and school markets and one day offer franchise opportunities, Castle Ink has no exit plans in mind at this time.
This segment is a part in the series : 1Mby1M Deal Radar 2012