Microsoft monitoring US retail relationships

Microsoft monitoring US retail relationships

Microsoft has introduced a program in the US called Retail 2000 which sees the vendor dealing direct with selected retailers while a nominated distributor handles dispatch. However, don't expect to see it on this side of the Pacific in the near future.

Although currently under trial by its parent company, "there are no immediate plans to implement the same model here", according to Alan Bowman, director, consumer and retail, Microsoft Australia. Bowman said Retail 2000 is a model that "moves distributors from a margin-based relationship to a fulfilment-based relationship.

"We are going to be watching it with interest and if it works there may be an opportunity for us to do the same thing here with one of our distribution partners," he said. "It is very similar to what a lot of distributors are already doing for their customers - fulfilling direct," Bowman said.

With the stated aim of trying to provide better service to retailers, Microsoft's Retail 2000 program sees retailers dealing direct with it to place orders while a nominated distributor leverages its good infrastructure to manage dispatch.

Jeff Tobias, executive chairman of Dataflow, one of MS' existing distributors with enormous retail penetration, said that in the US a lot of vendors go direct with their key retail customers.

"I don't think it in any way threatens our position," Tobias said. "A lot of the big retailers in the States are head office-owned which makes this sort of model much easier for vendors than it is in Australia.

"Although a lot of retailers say they would like to see it happen, it is not a trend that we are seeing as yet. If anything, what we are seeing is the clever retailers culling the number of suppliers they deal with. They want to consolidate their supply lines rather than deal with more," Tobias added.

Refining and streamlining

Bowman said MS works on a day-to-day basis with its distributors refining and streamlining how they deal with retailers.

"Any changes would be undertaken in consultation with them," Bowman said.

"The retail space is all about having your products on the shelf and in stock all the time. Finding a way to work with your distributors to ensure that happens efficiently is all part of the challenge," he said.

"We already have direct relationships with retailers in marketing and promotion, but the physical shipping and invoicing is all done by the distributors and will remain so for the foreseeable future.

"We are not trying to bypass the distribution channel. Over the last five years all of our warehouse and distribution infrastructures have been dismantled and our distributors do that for us.

"One of the great things about the channel is that it is evolving all the time and you have got to find better ways to service your channel," Bowman added.

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