Toshiba margins squeezed

Toshiba margins squeezed

Frantic Toshiba resellers can expect an even hotter than normal sales blitz in June, while haggling with distributors intensifies as the end of the financial year approaches.

As sales figures for this year close off, at risk for distributors are bonuses worth hundreds of thousands of dollars. Distributors that make their annual targets are in line for a rebate of an additional 1.5 per cent on the whole year's sales.

Instead of quarterly rebates for making targets, it is understood to be the first time the added inducement has been based on the whole year's sales. So for a distributor with a target of say, $20 million, the extra payout by Toshiba is $300,000.

The result is even hotter pricing than normal for the end-of-year rush.

Roger Bushell, managing director of CHA, which he claims is Australia's largest Toshiba distributor, said that there was a lot of discounting going on at the moment.

"Discounting on Toshiba products is causing drama in the channel at the moment," Bushell said. "It is as if there is a surplus of stock out there at the moment but there isn't."

According to Bushell, despite difficulty in getting stock, they've still had to discount to stay in the running on some deals. But he added that while CHA has met all its targets month- to-month, it was finding it especially bad in New South Wales and tough in Victoria.

One distributor has even tried to buy additional inventory, which would ensure its annual target, but is stymied by lack of available stock of the hottest lines.

The problem is, according to one reseller, on top of some stock shortage problems, the frenzy for hitting the target is creating a ripple effect through Toshiba's resellers.

Sales staff from some overly zealous distributors are reported to be offering all kinds of inducements that can disrupt channels and stretch the resources of smaller Toshiba resellers, while exacerbating the already anorexic margins.

Phil Cameron, national sales manager for Toshiba's Information Systems Division, said that it was premature to comment on the sales performances of their distributors, as there was "a lot of selling yet to happen before the end of June". Cameron claimed Toshiba is having a great year, adding that the higher demand for its most popular Satellite models has led to a continual turnover of stock.

"We have stock coming in every week," Cameron added.

A similar rebate also applies to the "five-star dealers". While none of the five-star dealers were willing to go on the record, all claimed to be on track for their sales bonus. While acknowledging the hot market conditions, one said that the problem is not restricted to Toshiba.

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