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Editorial: First cab off the rank

Editorial: First cab off the rank

Five months after Ingram closed its acquisition of Tech Pacific, Nortel has become the first major vendor to decide it isn't getting the love and attention it craves from the new distribution powerhouse (see ARN April 20 cover story).

Common sense suggests it won't be the last - not necessarily because of any failings at Ingram, but simply because it is an inevitable process of natural selection. It isn't that the distributor doesn't have the resources to cope with its current number of vendors (sales director, John Walters, has pointed out that new Ingram has added less than 20 vendors to the already substantial Tech Pac portfolio and has beefed up its resources with that in mind).

The problem is that Ingram, like any other well run business, will be flexible about using those resources to maximise its bottom line potential. And if nobody is knocking its door down to demand the products of one particular vendor; the distributor will concentrate on other vendors that are proving more popular. That is simply applying business sense but it will undoubtedly see more vendors leaving camp during the next few months, muttering about a lack of focus as they look for new partners to drive their local sales.

Listening to the views of its boss, Ross Cochrane, it sounds like Express Data could also part company with Nortel in the near future. If there is a lack of demand for Nortel gear in the Australian market, he quite rightly points out that it is the vendor's job to create it.

Nortel was making all the right noises during its recent partner conference in Perth (check out the full report here). Its partners will have been heartened by the battle cry but it is one thing to say you are going to take on an 800-pound gorilla (Cisco in this case) and quite another to get it to part with any bananas.

Over at Westan, Victor Aghtan has shed some light on the lemming-like behaviour of Australia's distribution community in recent months - shortly after announcing he too will open an office in Auckland next month.

It seems the trend is largely being driven by the vendor community as a way of improving their efficiencies in this part of the world. Aghtan estimated a New Zealand operation is worth about 15 per cent of its Australian counterpart but said the cost for a vendor to support a distributor across the Tasman would be almost as expensive as it is here. Vendors are therefore encouraging disties to make the move as a way of consolidating the number of partners they deal with in Oceania. If one of your major vendors makes the request, it is likely to be an offer you can't easily refuse.

Over in the other hotbed of the moment, Western Australia, a local distributor has reported competition is getting fierce. Compu Wholesale director, Jennifer Clay, is concerned the arrival of national players such as Bluechip Infotech will put a squeeze on the margins of local companies that had been doing very nicely thank you before the recent influx.

But this is still a relationship business at the end of the day and smart local operators that have built a reputation for treating customers with respect will survive the shift in market conditions. On the other hand, any company that believes it can carry on regardless without looking for ways to improve its value proposition is likely to fall by the wayside.


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