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Zero margin pioneer ready to hit home run

Zero margin pioneer ready to hit home run

The Web-based zero-margin reseller is not only already here, it is about to show its muscle in the channel.

The new-look Web site of online retail trailblazer Wholesale Direct (http://www.wholesaledirect.com. au), due for launch on October 1, heralds an aggressive new channel business model.

The new plan will see WD set up a franchise operation providing fulfilment and services by real bricks-and-mortar channel businesses, similar to the way petrol stations sell petrol to attract service and repair business.

According to WD marketing director Michael Tregurtha, the company is preparing to move into top gear as it tar- gets the SME market with a user-friendly site designed to attract a wider audience than IT professionals. "We plan on being a noticeable e-commerce," Tregurtha touted.

WD, a subsidiary of Sydney-based Computer Way, sprang to prominence in April last year by selling products to end-user customers at Tech Pacific's dealer buy prices.

At the time, its business plan was to promote services associated with the products it was supplying at zero margin.

The concept raised the ire of many in the channel who accused WD of accelerating the demise of any margin in the supply of IT hardware.

But 18 months on, it is now revamping its Web site and reviewing its supply relationships, while the beefed-up management team is preparing for another major online assault on the SME market.

And it won't just be computer products from the one supplier. Tregurtha revealed that the site will also include mobile phones, furniture, stationery and eventually flowers and liquor.

"Just like a co-op, we want SMEs to feel very comfortable that we are looking after their interests," Tregurtha said. Recognising that the SME market is a highly competitive space, Tregurtha claimed that WD has some advantages other than its price point. "All online sites will have specials, but on a basket of the more than 20,000 products we will offer, we'll be cheaper.

"The site will be easier to navigate, based on joust menu principles, the payment options will be expanded, and the product range will be broader and suited to the target customers. We will also link the services to a local associate."

But he was reluctant to reveal the details of any of the new supply arrangements, adding that they were "in discussion with a number of suppliers, including wholesalers and distributors, and are hoping to have a few more on board for the relaunch".

And among the newer recruits to the WD management line-up, there are some well-connected people. Technical director Malcolm McKinnon is managing director of Computer Way. Tregurtha himself was a long-term staffer at McDonald's, most recently as director of operations.

Purchasing and distribution director Michael Hogg was previously sales and marketing manager at Federal Express. WD's new managing director Tony Tregurtha was formerly a consultant at Halesworth Partners, and development director Angus McKinnon is said to be the initiator of the business concept.

The longer-term plan is to create a franchise operation, which will combine the functions of fulfilment and service provision.

It will be a busy time for WD, as Tregurtha also revealed that it is in the process of appointing a board, the chairman of which will be announced in the coming weeks. And a month after the launch of the new look site, it is scheduled to launch another site which will allow government purchasers to see ex tax prices (http://www.austgov.com.au).

But for now, the behind the scenes work continues, and the heat in the online channel continues to rise.


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