Independent retailers have always had a tough time competing with the mass merchants. Now it appears many PC vendors don't want them competing at all.
Resellers have slammed a recent tactic used by vendors: releasing new models to the mass merchant market weeks or months before the rest of the channel, with a different model number and a substantially lower price point.
While it is a practice undertaken by most PC vendors, including HP/Compaq and IBM, the channel-friendly Toshiba has ruffled a lot of feathers in recent months by trying it with a new range of notebook computers. Facing unprecedented demand for its high-end corporate machines based on the Pentium 4 chip, Toshiba has supplied the mass merchant channel with models that other Toshiba channel partners are not permitted to sell.
The rest of the channel is left waiting for a different model, with comparable specifications, to be released several weeks later. "It is really, really annoying as a retailer," said Sasan Rohmani, managing director of Adelaide Computer Superstore. "They are the same products when you look at the specs -- they just have a different name and model number, and are priced much cheaper for the big chains."
Gary Lawrence of NSW dealer Portable Computer Systems said independent retailers and corporate dealers are frustrated because buyers do not make the distinction between the retail and reseller models.
"Customers come in and ask if we can match the pricing of the major retailers," said Rod Crige, director of Perth's Hardware House Computer Shop. "It's pretty frustrating when you have to say that regardless of whether you could match the price, you can't actually order that particular product. It drives your customers elsewhere."
Ralph Stadus, Toshiba Australia's general manager, said any complaint about such a strategy was a case of "sour grapes". He said the special deals for mass merchants exist because the likes of Harvey Norman spend a lot of money planning and generating demand in the market. With a Toshiba product in the catalogues of such retail chains, lead times vary from six to eight weeks. "The independent dealers, on the other hand, like to be flexible and reactive to the market. But they can't have their cake and eat it too," he said.
Lawrence said he understands Toshiba's motive behind the early release procedure as the large retail outlets spend more in advertising to raise awareness of the brand. However, it is questionable whether it generates more sales for Toshiba in the long run.
The strategy sees independent retailers recommend other brands in favour of Toshiba. Sharon Savage, managing director of Advanced Computer Services in Newcastle, is one of several resellers that has grown tired of Toshiba's supply issues and is selling very little of the vendor's product as a result. "We just sell them a different brand that has similar specs -- people like Acer are likely to benefit from this because they work closely with their partners," she said.
Stadus said the mass merchant channel only makes up around 18 per cent of Toshiba's business, so it is unlikely the vendor would put in policies that "favour the big guys". Toshiba has in excess of 2,000 resellers, and Stadus said it is always a challenge to keep them all happy. "A little while back we were wondering whether we should get rid of such concerns and reduce our resellers to 400 or 500," he said. "But that's not our strategy. We support all the resellers."
Stadus said resellers and retailers should feel free to write to him or call him if they require further explanation. He also said he is happy to hear from any retailers who wish to work with Toshiba to cooperate on product promotions the same way the mass merchants do.
Stadus said much of the vendor's recent supply issues have revolved around the high-end range of notebooks that run on the P4. As a solution, Toshiba has now released to the wider channel the P4-based TE2100. It is the new version of the TE2000, a machine that smashed sales records for the vendor in Australia.