All our eggs in one basket: resellers agree on the dangers of a bigger TechPac

All our eggs in one basket: resellers agree on the dangers of a bigger TechPac

How do resellers feel about the Tech Pacific takeover of Merisel? We rang a num-ber of Australian Reseller News readers to see. While most had a "wait and see" attitude, many spoke up about the problems they've already noticed in the industry, and the effects these may have.

Rob McGuiness, managing director of MacPlan Logistic Systems, said he didn't think the buyout was good for the industry at all. "As someone who bought from both, I will seriously consider adding another distributor to my suppliers. I'm worried that TechPac's prices will go up now, and I may not have the range I need in the future." He said he knew of other resellers who may not want to deal with Tech Pac at all.

David Ridley, sales manager with Sarcom, asked: "Will TechPac be able to maintain its service level with all the new business?" But he added: "We wouldn't go with another distributor unless they show they can't maintain service levels." He said his company had already stopped buying from Merisel because they weren't happy with the level of service. "But isn't this an interesting opportunity for Q*Soft."

Peter Grunwald of Coglin Mill said he would have to wait and see what happens. "I don't yet know what it means for us. The fax we received told us it was, 'business as normal this week'. And I don't have any reason to expect prices to rise as a result."

Stuart McIntyre of Cache Computing Services bought from both companies, and was used to playing them off against each other to match price. "Now I'll be forced to develop another supplier. That puts us back to the same place we were at six years ago, having to establish a line of credit with a distributor." He added: "It's a good thing we didn't have all our eggs in the Merisel basket."

He sees the buyout as "a wonderful opportunity for someone. If I was a distributor I'd be looking to pick up some of Merisel's business. In fact, companies like Tech Pacific have such a wide range of products that there are too many for the sales reps to be knowledgeable about. Sometimes it is better to go through a smaller distributor with a high level of service."

Availability and service

Peter Wigley, managing director of Open Systems, said the takeover will inevitably mean less competition and higher prices for resellers and end-users. "And there'll be less warehousing of products in Australia. Before, it always seemed to be the situation where when one would be out of stock the other wouldn't." His advice to TechPac is to "keep in touch with its grass roots - meaning its resellers, not just the big retailers". Other resellers agree.

Steve Bevan of Micro Sales believes "there could be an impact on availability, and we may have to go through the smaller distributors too". He also noted that as companies get larger there is a tendency to drop the level of service.

Stephen Coldwell, sales manager with ADB Computer Systems, said he dealt with both companies "only because of the absence of better distributors". He also thinks service is a key issue in choosing a distributor. "Merisel, until six months ago, was terrible in terms of service, but they improved considerably by having staff who had a better knowledge of the products.

"Now I get a letter that tells you, 'don't get scared, business will stay the same', but the next thing you know everything changes." He also said he was surprised. "I thought it [the buyout] would've been the other way around."

Would he look for another distributor? "The fewer suppliers I need to deal with the better. The fewer relationships I have to start and maintain, the more time I can spend selling. Resellers have to reorganise themselves whenever sup- pliers reorganise themselves, which results in a lot of time taken out of my selling time."

But he added: "If this means a monopoly for TP and service stays the same and prices go up, then it is not a good thing. There's a danger that a lot of smaller distributors may come up and then we'll have to deal with lots of people, just to get the range we need. That would be chaos!

"And Com Tech needs competition. They are the most technically capable, but they focus their customer service on the top 20% of their customers."

What will he miss most? "SoftTeach! This was a great opportunity for resellers to get to know the products and learn about developments."

Jim Loader, sales director with Stott & Hoare, believes that "provided Tech Pacific organise themselves to take on the extra workload, it should be business as usual. Merisel's service level has declined over the last few years and TP is customer orientated, capable of doing business professionally."

He said prices may change as "the competition between the companies gave them the incentive to compete harder. We will continue to deal with Tech Pacific at this stage, but if their level of service deteriorates we will get on to the manufacturer to do something about it."

Hugh Smith, managing director of ComputerCORP, believes "other people [distributors] will enter the market. I think Tech Pacific are looking for an economy of scale. We use Tech Pacific in areas they're good at, smaller products that don't need support."

Tim Davidson of Moncreff said the takeover "forms a monopoly. There are fewer smaller distributors in the market place." He said he already buys from TechPac "because they are more aggressive on pricing".

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