Resellers must embrace e-commerce to remain competitive

Resellers must embrace e-commerce to remain competitive

The new generation of online order entry systems being deployed by distributors is seen by some resellers as having the potential to encroach on their turf. However, in the short term, use of Internet-based product information and ordering tools to bypass resellers and tap the end user market is unlikely in the short term.

But the new systems promise to disturb the delicate web of relationships linking distributors, resellers, vendors and end buyers.

Some distributors already are allowing end users to access technical product information online, says Ron Harris, managing director of reseller Harris Technology.

At the moment, end users "can look but not buy", Harris says. "But at a later time, some distributors may decide to bypass channel partners like us with some products because the Internet gives you the ability to sell Australia-wide."

Resellers need to upgrade their own online systems to protect themselves against possible incursions by distributors, Harris believes.

Even within the reseller community, the deployment of online order entry and product information via the Web is re-arranging market share.

Harris Technology, for example, publishes 30,000 products on its Web site it drives through the same live database that runs its business.

"Our customers love it," says Harris. "They can get in and order online and see their order status and delivery information via their purchase order number. I have one full time person just answering Web queries and e-mail."

Harris Technology sells to end users attracted by ultra-competitive pricing made possible by the company's large volumes, low margins business strategy.

Its Web site enables Harris to raid the turf of smaller regional dealers because it offers outlying customers rapid access to a broader range of products at tempting prices.

Online ordering systems with the potential to be used by individual accounts are now part of the standard armoury of most distributors. Electronic Resources Australia, for example, has introduced the IMpulse system developed by Ingram Micro, the world's largest wholesale distributor and ERA's part-owner.

ERA has not indicated it intends to open IMpulse's door to Australian end users but the system will raise the bar for other online distribution systems here, Harris said.

Other resellers believe it will be a long time before distributors will be able to compete effectively for the end buyer market thanks to online systems even if they decide they want to.

Business Computers of Australia marketing manager Louis Vellios is one who doubts distributors can bypass resellers.

Online systems may be capable of reaching end users but distributors simply don't have the skill sets to tailor solutions to end user needs, he argues.

"It has taken BCA 15 years to get to this stage and we've developed substantial expertise in that time that wouldn't exist with distributors."

In addition, large resellers give their customers a one-stop shop for all tier one brands unlike distributors who tend to be more limited in their vendor coverage.

Nor are most distributors able to address key areas such as customer support and service on a national scale.

On the other hand, Vellios predicts electronic ordering will help force a rationalisation of the reseller market. BCA, which focuses its efforts on Australia's top 1000 corporates, already offers online order entry to selected large clients and is looking to roll it out on a wider basis.

He suggests online ordering will become another weapon in the competitive armoury used by the more adept resellers to gain market share at the expense of the less nimble.

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