Synnex wins HP consumables deal

Synnex wins HP consumables deal

Synnex is set to reap revenues of up to $100 million annually after beating off a host of rivals for the place in HP's consumables channel vacated by the now-defunct Daisytek Australia.

But the Synnex win may have come at the expense of another one of HP’s distribution partners, according to an industry source, who claims Digiland has been axed by the vendor.

While HP was unavailable to comment, the vendor had provided no notification that it was ending its contract with Digiland, according to the distributor’s marketing director, James Macbeth.

“We’re not in a position to comment on anything until we get some guidance from HP. We’re a distributor until the contract expires at the end of October," said Macbeth.

"We don’t want to send misinformation to our customer base," said Macbeth, who was keen to stress that it was business as usual for the distributor. "We have plenty of stock to clear."

Last month HP’s general manager of Image & Printing, Rebekah O’Flaherty told ARN that that the vendor expected to change its distribution line-up this month after a “very complete review” of its supply business, which coincided with the loss of failed distributor Daisytek Australia. At that time O’Flaherty was keen to emphasise that the loss of Daisytek wasn’t the only reason it was seeking a new distributor.

Managing director of Synnex, Frank Sheu, said that the competition to replace Daisytek was "the most difficult battle" he had ever fought to win a distribution agreement.

"There were seven other companies vying for this lucrative piece of business but Synnex won out," Sheu said. "According to HP, this business could be worth up to $100 million per year which explains why everybody was bidding so furiously.

"Winning this distribution agreement is a firm endorsement of our business model and the responsiveness of our supply chain."

Sheu said that Tech Pacific was the big winner from the demise of Daisytek but he expected to immediately start making inroads into their market share through the dealer base it supports.

Synnex's existing relationship with HP's IPG group helped in the final decision, according to Sheu but it was its ability and willingness to counter the threat of non-genuine consumables that tipped the scales its way.

"It is no longer illegal to parallel import consumables and that poses a threat to HP's genuine products business," he said. "It was one of the strategic objectives of the appointment to expand the channel coverage for HP and that is one of the strengths that Synnex brought to the table. While the consumables distribution deal with HP is new, Synnex's relationship with the vendor is not. Nor is the selling of consumables.

Sheu said that Synnex has a $300-400,000 per month consumables business based mainly on removable storage media such as CDs, DVDs and diskettes.

Meanwhile, after being appointed as a hardware distributor by HP's IPG division less than 12 months ago, Synnex had grown that business to "about $50 million annually", Sheu said.

"With HP added, consumables as a category has become one of Synnex's very important lines of business," he said. "HP has also become an extremely strategic partner to us."

Wholesaling consumables for HP and other vendors represented huge challenges for distributors, Sheu said. This was because of the large number of different products.

While margins were "better than hardware", efficient inventory management was "crucial to success", he said.

"It is easy to make good margin on what you sell but then lose it in bad inventory management," Sheu said. "You have to move stock out the door before it becomes obsolete but you also have to have the stock when it is wanted. If you have no stock, customers will simply go elsewhere.

"These are challenges that Synnex face every day and we have great systems in place to manage them."

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