Nasty, brutish and short. Smaller independent computer resellers in Australia's regional and country areas fear those three words are an uncomfortably close description of their business life expectancy. For some, the situation is precarious enough that they can't help feeling that distributors in the big cities just don't care about the bush. Peter Young investigatesCountry resellers lack the volumes that compel respect - and discounts - from suppliers. They are perched on the end of a long supply chain, the sheer length of which turns the logistics of simple warranty repairs and replacements into major headaches. Their remoteness doesn't even guarantee them the consolation prize of a comfortable market niche any longer. Thanks to the Internet and the inexorable expansion of retail chains like Harvey Norman into regional population hubs, local competition is hotting up for them. Taken together, it is an unappetising, gloomy scenario.
Craig Webster, owner and manager of C&T Systems in Taree (population 30,000), is among those regional resellers caught in the Big Squeeze. He finds assistance from suppliers "virtually non-existent", whether it involves sending colour brochures, setting up training courses, warranty services, co-op advertising or sales rep visits. "In the bush we get nothing, absolutely nothing," he complains. Starting with Microsoft, for which he moves $100,000 worth of product annually, and moving through Dataflow, Epson, Canon and Compaq, Webster reels off a long list of suppliers whose reps never visit his shop.
Alf Stein, of Rivtech Computer Services in Wagga Wagga, midway between Melbourne and Sydney, agrees: "Out this way, we don't get a lot of visits from our suppliers."
Absence of technical seminars and product release seminars is especially noticeable. Of the major suppliers, only Microsoft has staged any, Stein says.
Webster points to the difficulty of obtaining colour product brochures as a particular sore point. "We are not in a situation where we can keep one of everything in stock. But people here will buy off glossy colour brochures." The problem is, he can't convince any of his distributors to forward the brochures. Requests are either ignored or "they send me printouts off the Internet, which I could do myself if that's what I needed".
He recently wrote a desperate letter direct to Epson's sales manager, who supplied a stack of product brochures from which he has since made four sales. It hasn't helped lessen his feeling that country dealers "are lost in a void. You go into the city and it feels like you're going into the future. The long and short of it is that in the bush we are two years behind Sydney and four years behind the US."
On the topic of competition from the big retail chains, Webster has mixed emotions regarding Harvey Norman's arrival in Taree three years ago. On one hand, his business nose-dived 20 per cent when Harvey Norman first opened its doors. On the other, Harvey Norman "has been a huge plus for us because its ad budget has raised Taree's awareness about personal computers tenfold from what I can do.
"Their colour flyers are magic. I love them because people see something on the flyers and then come in and ask if I can supply it."
C&T's sales are starting to claw their way back to pre-Harvey Norman levels with quality of after-sales service and support driving the trend, Webster says. "A lot of people who bought their first machine off Harvey Norman are coming here for their next system because they couldn't get answers about things like why their printer kept coming up with errors."
Webster is hard-pressed to name a single current distributor who gives competent, reliable service. The one distributor he and other resellers enthusiastically nominated as getting it right is Merisel, which has long since retreated from the Australian market.
"Merisel was a glowing example," says Webster. "Their accounting systems were good, their customer relations were magic - they were the best and they spoiled resellers by showing us what things could be like."
The vast majority of his current suppliers appear to him either unfair, incompetent or both. "We bend over backwards for our own customers but when we ask for that same level of support from our suppliers, we can't get it. You can ring half a dozen times for a price list and it's never sent. Often their invoices don't match their published price lists, or they send the wrong model."
Account problems are commonplace, says Webster. "At any one time, we will have a $2000 product back for replacement or waiting to get a credit processed. If it is going for credit, our account is placed on hold and we can't get any more stock."
One of Australia's largest distributors took three and a half months to put through one credit that kept C&T's account on hold the entire time. "It looked as though we hadn't paid the bill but we called them every statement to point out the real situation and every statement they promised to get onto it. It was criminal."
The Internet has made life easier for suppliers and distributors but "what have they done with all the revenue they saved from not having a person sitting answering phones?" asks Webster. "They certainly haven't used it to do something for us."
When he highlighted similar complaints in a recent letter published by Australian Reseller News, none of his current suppliers responded. The only vendor to call was Hewlett-Packard, which offered to enlist him in a new business solutions centre program.
"They were looking for 50 dealers to become business solutions centres who will receive the same level of support from HP as the wholesale channel. We would have to do $30,000 a month to stay in the program but we are going to go for it."
When it comes to wringing volume discounts and other concessions out of manufacturers, the big chains have smaller independent players hopelessly outgunned.
And the atmosphere of mistrust between competing small dealers works against them being able to combine successfully into buying groups, Webster says.
Adds Stein: "It is definitely true that smaller turnover disadvantages you when it comes to the bigger discounts available with volume purchases. We've looked into buying groups but haven't come to any agreements."
Peter Rae, proprietor of Country Computer Services, an Apple dealer in Dubbo, says the picture painted by Craig Webster is too harsh. He agrees that the level of support from his suppliers has dropped away in recent years in most cases.
But Rae no longer expects a "huge level of support" as his company has developed its own internal support mechanisms.
On the purchasing front, "as an independent store, we couldn't hope to generate volume discounts". However, there is a sweetener: he has joined forces with other Apple dealers in an informal association that often buys as a group from suppliers. He doubts if the same type of cooperative arrangement would survive in the more intense competitive environment inhabited by Wintel dealers.
He says Apple dealers "are far enough apart from each other that it isn't a problem". Anyway, he adds, tongue slightly in cheek, "Mac users are nicer people".
Rae believes tying resellers into a professional association like the Australian Computer Society in hopes of creating a better image would be a move in the wrong direction. A better approach for resellers would take advantage of the formal qualifications and certifications already being supplied by vendors such as Microsoft and Novell.
Even those are largely irrelevant as far as the great majority of off-the-street customers are concerned, Rae argues. "The guy in the street doesn't give a damn about any of that, he is only looking at the price."
There are remedies for many of the ailments poisoning relations between suppliers and small independents, says Corry Taylor, a partner with CPS Computer Shop in Tamworth.
"It's true that unless you place a minimum order for 500 to 1000 units, most suppliers don't want to know you," she said. "And yes, some big companies won't answer your phone calls. There is no such thing as 1800 numbers for us and you have to put up with long waits. There is no such thing as dealer support, you can't get a rep to stop in and you've got to really push to get probational gear out of somebody like Microsoft.
"But I have a feeling this has more to do with the size of the dealer than with a country-city thing."
Taylor's answer is to shop until she drops. "You really have to look around for a supplier or distributor. There are good ones - Optima, Asian Australian Resources, Multimedia Technology, CHA - but I've gone right away from the bigger ones. It is usually the smaller suppliers who pop in and help you."
Worried about competing with the volume discount brigade? "If you pay cash up front, you can get a good price," says Taylor. "You just have to look around and work smart."
Her technique is to buy something that she knows will create an immediate problem. If the supplier or distributor solves the trouble promptly, "then you give them another go. And if they don't [solve the problem] you forget them and find someone who will."
Taylor is adamant the problems dogging country resellers aren't part of an "anti-rural" conspiracy: "it has nothing to do with politics, it is pure business in the sense that suppliers don't want to know you if you are not doing a large turnover.
"So you have to find the ones for whom the small people are their bread and butter."