A new-look Tech Pacific has blindsided a number of its competitors with aggressive purchasing of several product lines, including Epson printers, which has left other distributors in short supply.
The strategy came to a head last week after Tech Pacific's "in stock guarantee" (ARN, March 27, page 16) launched into full swing, catching a few distributors by surprise.
Tech Pacific's systems and peripherals category manager, Joshua Velling, is unapologetic for the distributor's hard-line approach. "We've got to make sure we have the stock the channel needs," Velling said. "It's about matching the demand we've created, and that may mean in some cases we've taken [the] stock that's available."
The in-stock guarantee applied to around 150 product lines and provided resellers with 0.5 per cent rebates if Tech Pacific did not have inventory in stock on standard purchases.
May Zheng, national sales manager for Tech Excel, confirmed there were some stock shortages at the moment, particularly with Epson printers.
"Our account manager at Epson told us they will not be able to deliver any stock on most of their models until the middle of April," Zheng said. "Luckily, we have enough stock of most of these items to get us by until then but we would like to buy some more and refresh our stocks.
"It appears as though Tech Pacific has bought all the available stock."
Epson downplayed the apparent rift, with officials claiming the vendor had not changed any of its terms and conditions with Tech Pacific and that there had been no noticeable shortage of stock shipping into the channel.
"It's no different than what we'd see in the normal course of business," said Mike Pleasants, marketing director of Epson Australia.
"We have short periods of time throughout the year when distributors can't get hot lines [of product]. That's when distributors begin to shout loudly," he said.
When questioned whether Epson had noticed a significant increase in the amount of product purchased by Tech Pacific relative to the vendor's other distributors, Pleasants conceded that since Tech Pacific dropped its $33 minimum small order fee, the distributor's business with Epson had picked up considerably. Pleasants said that business had also picked up for Tech Pacific's other vendor partners as a result, and that the distributor's competitors are beginning to feel the impact.
The new Tech Pacific has drawn fire from a number of sections in the channel. "Tech Pacific is doing a lot of different things at the moment. They are getting very aggressive," said Fiona Dicker, managing director of Dicker Data. "The issue here is that there is a big price war between Ingram and Tech Pacific because Ingram took a lot of market share from Tech Pacific last year and now Tech Pacific wants to get it back.
"The real concern here is are they running responsible business models? They both seem to be taking the attitude that they have parent companies overseas with deep pockets. The question that you really have to ask is how long can it continue?"
Michael Bosnar, managing director of Hewlett-Packard distributor eXeed, said buying up stock to corner the market was something he used to do in the late 80s and early 90s at Prion, but it was an uncommon tactic these days.
"Most vendors won't let you do that anymore," he said. "They usually won't let anyone take a monopoly in that respect, as it tends to upset all the other distributors."
Meanwhile, Tech Pacific's Velling said the company is merely addressing the fundamentals of distribution such as having inventory in stock, matching the market on price, providing credit terms that enable resellers to conduct business, and imposing appropriate freight charges.
The in-stock guarantee is the second two-week promotion Tech Pacific has run in as many months. Although Velling would not be drawn on whether the distributor would continue to run fortnightly promotions as part of its strategy to win back market share, he did invite resellers to "watch this space".