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Wholesale Direct challenges reseller thinking

Wholesale Direct challenges reseller thinking

Old-firm resellers are crying foul at a nifty initiative by local reseller Computer Way, which buys product from distributors such as Tech Pacific and onsells the goods to end users via its Web site at identical prices.

Computer Way has gambled on the idea of adding no margin to the initial sale of products to end users and is pinning its hopes of profitability on offering non-compulsory services and support.

The brainchild of Computer Way managing director Malcolm McKinnon, the company's Wholesale Direct Web site (www.wholesaledirect.com.au) was borne out of an average Sydney reseller's belief that there is no future in small margin selling. It was established three weeks ago and already has attracted more than 500 customers.

"Less and less of our business now can generate profit from the retail area," McKinnon said.

"So what we decided to do as a service to our customers was put different wholesalers' price lists on the web, and allow them to buy directly without human intervention."

Computer Way's target market is small to medium businesses, but McKinnon acknowledges that other buyers may take advantage of the cheap prices and not use him for service and support requirements.

"As long as we get 10 per cent of customers requiring our services, we will make money," he said.

But it is the impact of the remaining 90 per cent's behaviour that has other resellers concerned.

Tim Rosser, sales and marketing manager at Sydney-based reseller Rosser Communications, can see ramifications for the whole channel with the injection of Wholesale Direct into the market.

"People could lose a lot of business, especially on commodity items," he said. "A lot of people don't need service, and with the prices being the way they are, he is just taking the margin out of the channel."

Rosser acknowledges that the trend of focusing on services and support is slowly occurring, but added: "There's no need for resellers to cut our own throats to hasten it."

Wholesale Direct currently only stocks products from Tech Pacific, but McKinnon plans to add all major distributors' price lists to the page.

When contacted by ARN last week a Tech Pac spokesperson was quick to point out that any claims relating to Wholesale Direct's mirroring of Tech Pac pricing do not indicate a direct selling collusion with Computer Way.

"We have no intention, nor will ever have any intention to sell directly to the end user," a spokesman said.


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