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Disties warn Acer: It will not work

Disties warn Acer: It will not work

Former Acer distribution partners have warned its direct-to-resellers distribution model is doomed.

Official Acer distributors Siltek, CHA, IT Wholesale and Alloys International were all given 60 days notice last week of the implementation of a new one-tier channel model, and that existing arrangements will be made null and void. The notice came with an invitation to apply for Gold partner status along with resellers that will also be eligible for direct relationships with Acer.

The vendor's decision to put even small resellers on the same price list as the distributors has been met with bemusement by the vendor's former wholesalers.

Bruce Harvey, CEO of distributor Siltek, said he was shocked with the sudden and cold manner with which Acer terminated its current distribution agreement.

"They suggested we might like become a gold partner and sell direct to end users in competition to our reseller base which is outrageous."

Harvey was also scathing at Acer's "naivety" in thinking it can manage relationships with any more than a few large accounts.

"These guys are in a dreamworld," he said. "The mind boggles at how they think they can grow sales by restricting themselves to an elite band of resellers.

"The decision is either a badly managed one, or a knee-jerk reaction to the current economic conditions. It is an ill-informed move.

"We will live with it, but we will no longer be selling Acer product. I have already earmarked those resources to be redirected at other vendors who remain committed to our role in the channel."

"[Acer] won't have the resources to manage 200 resellers' accounts," he said. "It is a difficult business and they have no idea what they are in for. It is a program that is doomed for failure."

Roger Bushell, managing director of CHA, went one step further, saying it was the latest in a series of "odd" calls the vendor has made over a sustained period of time.

Bushell sees the move as a "desperate attempt to clear a lot of stock" by lowering retail prices. He pointed out that the qualification for an entry-level buying relationship with Acer would see resellers selling as little as $20,000 - or "a couple of laptops." - per month.

"They have got to be kidding," he said. "We have built Acer sales up to a $1 million-a-month business and have no buy-break on someone doing a fraction of that. Forget it. We're out of there."

Bushell said it was hard work managing the Acer relationship to begin with and he is now able to better focus on further consolidating the company's Toshiba business.

"If there are 26 rules in the A-Z of vendor/distributor relationships, they broke them all," Bushell said. "They have no idea of what they are doing in channel management and are in for a rude shock if they think they can get by without distributors."

Bushell also said resellers that want to do business with them are in for a surprise as well. "There is no loyalty at Acer," he said.

James Watson, director of Queensland distributor IT Wholesale sees Acer's move as clearly being an attempt to cull distributors, but is confident Acer management will reassess their options and reverse the decision within months.

"It's been tried before," he said.

"We will continue to support Acer," he said. "As far as we're concerned, our relationship will not change with them."

Ian Vagg, director of South-Australian distributor Hi Tech Distribution, said the news came as a shock as his relationship with Acer was working very well. But after analysing his sales data, Vagg said there was only one Hi Tech reseller that sold anywhere near the amount necessary to be considered a Silver reseller, therefore Hi Tech should be able to continue to distribute Acer products as normal.

"I suppose our option is to live with these lower margins or continue selling a PC that is overpriced," he said. "The price pressure is all driven by Dell - they found a cheaper model and other vendors have to reduce margins in the channel to compete."

Alloys International sales manger Phil Gibbs is philosophical about the changes.

"Vendors have spent the last two years in the nirvana of e-commerce and now they don't know what to do," he mused. "I've looked at where our business is, and any company that is big enough to attract Acer's attention has a direct relationship anyway."


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