Compaq moves to boost its direct online sales

Compaq moves to boost its direct online sales

Moves by Compaq to boost its ability to sell directly over the Web have been greeted without much fuss from resellers contacted by ARN last week.

The resellers claim that they were already revamping their business models to counter such threats by carving out niches as service providers.

Compaq last week announced in the US the creation of, a department that deals exclusively with the advancement of online sales. Compaq ardently hopes it will encourage direct sales through its virtual store, which will be totally redesigned to facilitate the process.

However, Compaq Australia told ARN that there was no guarantee that Compaq would mirror its US counterpart. Compaq's corporate communications manager, Anne Eckert, explained that the situation in Australia will be closely monitored so that Compaq can ultimately give the customer what they want, be it to deal with the channel or Compaq direct.

Compaq is not the only vendor looking to increase its profitability via the Web. Earlier this year, 3Com announced it would look to do 80 per cent of its business via Web sales this year. Rival Cisco already does 75 per cent of its business over the Internet. While both claim orders are fulfilled through resellers, the trend will no doubt dramatically change the role of the channel.

Investigations by ARN last week reveal that a huge number of resellers are already meeting such threats and challenges by metamorphosing into service providers.

They tended to believe that the evolution was inevitable and made good business sense.

"Resellers are providing support for sales that the vendors are making online," claims Brent Chapman, proprietor of Brisbane reseller Affordable Technology. So instead of moving boxes, resellers are now offering the after-sales services to customers, a much more lucrative and recurring component of business, according to resellers who have made the journey to the other side.

Yet this position is not without competitive spirit either. Compaq has announced that it will induce customers buying products online to utilise its services as well, a situation that if successful could jeopardise a reseller's newly created position in the channel. Eckert responds to this by pointing out that Compaq has an obligation to provide some support, whether to the customer or the channel. Additionally, she asserts that there is a "differentiation between the services Compaq can provide on the Web, such as downloading a packet, to the services resellers can provide".

Fantastic strategies

According to Serantino De Simone, sales and marketing manager of Victorian company MicroHelp Computers, the online sales strategies that vendors are adopting are "fantastic. We do big projects for clients and now clients can get their small needs met elsewhere. If you have a good relationship with a client and are project-orientated this is great, but I can see that for other resellers not so project-orientated this could be a threat."

"Australian buyers are ready to try anything," Chapman believes, including online shopping. "So we need to shift our focus to upgrades and service components of business."

Dennis Crooks, director of Integrated Digital Solutions, has similarly embraced the change. "We are now concentrating on accountancy software and after-sales service, even though we doubled our hardware sales in the last three years."

3Com's MD Gerhard Rumpff said its online system would benefit the channel. "This system is more automated and easier for all our partners to order from," claims Rumpff. Resellers went to the extent of saying that this was a positive evolution for the reseller in that it now allowed them exclusive access to the service market.

Rumff agrees with this assessment, indicating that "the market has become so much bigger. In the past we did a commodity sell, today we have to do a solution sell. The vendor can't provide that level of service to that broad a market."

Eckert claimed Compaq was aiming to support the transition "investing in the channel to help them broaden their expertise to enable them to compete in new markets, which would be services. We want to skill up our channel."

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