Middle tier channel faces oblivion

Middle tier channel faces oblivion

SYDNEY - In light of the massive streamlining achieved by the likes of Dell Computer and Gateway 2000 in the US and Australia, a recent Dataquest report has warned resellers and distributors to reconsider distribution strategies or face oblivion.

In Australia, the situation is not as diabolical. However, Bruce McCabe, Gartner Group/Dataquest's senior industry analyst, said successful middle-tier resellers and distributors will inevitably be exposed to the efficiency squeeze.

"Direct selling is just one part of Dell's efficiency model," McCabe said. "To compete, middle tier players will need to incur the same marketing, support and manufacturing costs as the big multinationals and the likes of Harvey Norman."

This perceived threadbare future for medium-sized resellers led, for example, to the transfor-mation of Queensland PC reseller Datamini Computers into a wholesale and distribution company.

Now operating as Information Technology and Personal Computers (IT'n PC), the refocused company has spent the past year banding together about 20 dealers from around Queensland under one company name. They now have brand and store recognition in order to compete with the larger chains.

According to managing director and Datamini founder Corey Tai, IT'n PC recognised that it wouldn't take long for the likes of Harvey Norman to enter the market and capture end-user attention.

But Tai alluded to one advantage that IT'n PC held over its rivals: "Organisations such as Harvey Norman don't provide service and backup support for their PCs, which is precisely what we can deliver to our customers," Tai said.

Uniting resources

But not every reseller or distributor is in the position to unite its resources in the fight against the direct sales model, he said.

Tai said much of this survival is dependent on marketing and support rather than purchases.

"To be successful, 80 per cent of your business needs to be focused on marketing and backup support, with 20 per cent on purchasing".

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