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Fees dropped: Resellers return to Tech Pac

Fees dropped: Resellers return to Tech Pac

Resellers across the country have applauded Tech Pacific's resolution to drop its charges on small orders, with many vowing to resume business with the distribution giant in light of the decision.

But that does not mean they will forfeit the relationships they have forged over the last six months with new suppliers. The channel ire created by the fees has yielded an interesting by-product - it has opened up the distribution market.

"We established relationships with distributors that we otherwise would never have dealt with," said Peter Gartlan, executive director of Comstra in Hobart. "If it wasn't for a great account manager at Tech Pacific, we would have taken even more of our business elsewhere."

The sentiment is echoed by Sydney-based IT National managing director John Foxe, who considers the dropping of small order fees to be "terrific news".

IT National moved "aggressively" towards other distributors in the wake of the small order fee, but began dealing with Tech Pacific once again after the small order fee limit was dropped from orders of $999 or less to orders of $250 or less.

Foxe said he has returned to Tech Pacific because they have the best systems and levels of service, and provide a drop-shipment system that surpasses their competitors. "They will get a lot of business back," he said. "But not as much as they lost."

Yet despite returning to Tech Pacific, Foxe said he will keep the door open to alternative distributors. "We'v gotten to know people we otherwise wouldn't have if the fees hadn't been introduced," he said. "Once you build these relationships and work with the people, you can't just let them go."

Michael Feldbauer, proprietor of Territory Technology Solutions in the Northern Territory, said the elimination of the small order fee was good news for both resellers and Tech Pacific itself.

"The small order fee was an invitation to go somewhere else," he said. "It was an inconvenience more than anything, having to bundle your orders. Now we will place a multitude of smaller orders [with them] that would have otherwise gone elsewhere. It keeps the customers happy - they get the products quicker."

Feldbauer said that along with price, stock availability and the supplier's relationship with freight companies, online ordering systems have become one of the most important factors when choosing which company to do business with.

Resellers' reaction to the fee was as much about the perceived arrogance of such a charge as it was about money.

"The notion of having to pay a supplier to buy stuff off them is just wrong," said Frank Beverwijk, managing director of Arrow Computers in Perth. "Normal margins can't cover a $33 fee. It's unreasonable in my mind. The fact that they ever considered such a scheme shows there is an attitude problem there."

Even larger resellers were put off by the charge.

"We are a fairly significant player with Tech Pacific and it was disappointing that they weren't able to provide more leverage for small-end items that often have lower margins anyway," said Robert Manchinelli of Corpnet Computer Solutions in Queensland. "But Tech Pacific are a good outfit. Based on our dealings we are very happy with the way they approach customers."

"I could understand the philosophy, but the execution was not well thought out," Comstra's Gartlan said. "They upset their largest customers while trying to rid themselves of their smaller customers.

"There are other suppliers with small order fees, but they are generally pretty trivial and understandable," he said.

No doubt Tech Pacific hopes that scrapping the minimum order and restocking fees will play a definitive role in rebuilding reseller relationships.

"Tech Pac aren't always the cheapest," Foxe said. "But if you get the service, you pay a small premium for it. What they didn't realise was that there is a threshold to that premium."

Have you got fees you need to scratch?

Forking out fees is a fact of life, but that doesn't mean resellers like it. Here's what some resellers have to say about the costs of doing business:

Freight

"We don't have a problem with freight, you generally bill that cost to the customer".

"It is ridiculous how much the price of freight varies between suppliers".

"Our biggest issue is the price of freight".

"The biggest problem we can face on any given deal is getting an unexpected freight bill, when the goods are shipped by different means than what we agreed upon".

"Because of the margin business we're in, freight can have a big impact".

"Effectively you can't afford to be making small orders anyway because the courier costs will get you every time".

Restocking

"Not only do we have to pay the restocking fee, we also have to pay a lot of freight to get the product back".

"In many cases we may as well hold onto the product and sell it later".

"It's only a last resort to send it back".

Credit card surcharge

"What they don't realise is that they are setting up a barrier to business".

Other charges:

"They want us to sell their wares, but charge us to do it".


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