Resellers feel market squeeze

Resellers feel market squeeze

TodayTech managing director, Jack Zhong, said a few resellers were trying to undercut already bottom-dollar product prices, making matters worse.

"The market has been slow and we don't see things improving in November," he said. "We're disappointed by the news [of more resellers closing], but these things happen in every industry." Multimedia Technology (MMT) general manager, John Hassall, said the IT channel consisted of a mix of resellers genuinely struggling to make ends meet, and businesses that lacked competent management skills.

While agreeing that more resellers would fall, he pointed out the industry had already gone through a major clean-out after the GST was introduced in 2000.

For Aus PC-Market's Michael Vorsterman, those most at risk were resellers who relied on price-sensitive consumers to drive sales.

"We work with a lot of corporate customers who continue to buy hard drives whether petrol prices have gone up or not," he said. "Consumers who are price sensitive will hold off purchasing a new CPU because they don't really need it.

"Those operating in that bottom segment of the market are the first to go to the wall because there's less fat in their business. If you lose 20 per cent of your sales and you're working on a 5 per cent margin, you're gone."

The difficulties are not restricted to resellers alone. Altech's Blong pointed out distributors like Altech, Ingram Micro and Westan were diversifying product lines in a bid to find new revenue streams and keep their heads above water.

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