HP will take an additional 15 per cent of its printer retail sales out of distribution to fulfil directly.
The vendor currently services 70 per cent of retailers directly including Dick Smith, Harvey Norman and Officeworks. HP Imaging and Printing Group (IPG) vice-president for South Pacific, Christoph Schell, said the change would help bring transaction costs down.
"The market is over retailed - it's ripe for consolidation. Retailers want to go direct with HP. So we're taking more of them direct," he said. "It just doesn't make sense if we've got to pay distribution for that supply chain."
In October, Schell told ARN the cost of doing retail business through distribution was too high. He blamed the need to improve efficiencies on toughening market conditions.
The latest changes come into effect in June. HP will continue selling all printing consumables via distributors.
Schell acknowledged its distributor, Ingram Micro, had a strong retail practice but denied his decision would hurt its bottom line.
"If there's no money in it for the vendor, there's no money there for distributors," he said.
Ingram Micro managing director, Guy Freeland, was disappointed by Schell's decision, but said it would have minimal impact. He did not disclose the names of those now going direct.
"We would much prefer to continue to service those couple of customers Christoph [Schell] wants to take back, as we had good relationships with them," he said. "All we can do is provide the best level of service to our customers. In this case, HP has made it attractive to the customer to go direct and they've accepted that offer. We wish it didn't happen, but there's only so much we can do."
Synnex managing director, Kee Ong, said HP's retail strategy would have no impact on its business.
"We are the new guys on the street for this business, so I can't see HP's decision having any affect on our momentum at all," he said. "I can understand their decision for taking it direct based on the cost factors and support. What we can do is stabilise the volume business and provider better logistics support for the broad-based resellers."
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