NEWS ANALYSIS: Dodgy markets

NEWS ANALYSIS: Dodgy markets

Travelling computer markets, where hundreds of small dealers sell IT goods to the public en masse in ovals and halls around the country, are seen by many resellers as the host for every variety of unscrupulous business practice in the IT industry.

Retailers, industry advocates such as the Business Software Association, and even the Federal Police are aware of the practices that take place at such events. Piracy, re-badging of unbranded product, tax evasion and the sale of faulty products are just a few of them. Industry advocates seem powerless to stop the problem, and are calling on urgent government action to address the issue.

Ian Burraston, proprietor of Computers Etc in Gympie, said such practices have forced him to pull out of the retail channel. Like many regional resellers, he is constantly seeing his customers walk in after being fooled into buying dodgy products, leaving him with the issue of cleaning up the mess.

Another regional NSW reseller, who wished to remain anonymous, described the operators of the markets in his town as "a slippery bunch of eels".

"We have customers coming in all the time who got ripped off by a guy at the markets," he said. "When they return to the markets the next week the guy says, ‘not mine, I never sold that'. I'd say only about 5 per cent of these guys are genuine."

The type and variety of such markets vary. Generally speaking, regular meets in major cities have a better reputation for keeping control over unscrupulous traders. Of larger concern for the channel are travelling shows that roll into regional areas, set up shop over a day or a weekend and are gone before sunrise.

Burraston used the example of one regional Queensland business that often conducts "auctions" in the area, claiming to be a recycler of ex-government machines. But rather than being sold in one location, customers have to ring ahead to reserve a time and place to view the product. "They put an ad in the paper every few months, then rent some premises out where they can escort customers on an appointment basis," he said.

Max Moreton, director of Computer Swap Meets in Victoria, said he is aware there are several organisations in the industry that give the computer market a bad name. He said that even though many market organisers invite local resellers to participate, even the cleanest of markets is a threat to the local retailer.

"We love to have [local traders] on board," he said. "But I can imagine some retailers would be upset. The traders at our markets are hard to compete with. They are highly organised but they have very little overheads -- no rent, no staff to employ. It means they can work on very small margins."

Moreton said there is no greater probability of pirated or faulty products being sold at his market than there is at any computer reseller. "There is a certain security about our markets with manufacturers," he said. "In a small computer shop, pirated stuff can be kept under the counter -- you need a search warrant to properly investigate them. But in our markets, there is nowhere to hide it. The authorities could take months to investigate 100 traders who had their own shops, but at our markets they can check 100 traders in an hour or two. It's all there on display."

Moreton said traders sign an agreement which says they aren't selling illegal software. If customers complain, he investigates. "If they're selling pirated stuff, they go -- they're not welcome anymore," he said. "But we don't have too many problems -- in a month of trading you could count the complaints on your fingers." Moreton added that he had banned a trader last week.

Despite such assurances, resellers question the motives of market organisers. "If 20,000 people go through your door at three bucks a head, I think you'd be pretty keen to keep your mouth shut over some dodgy traders," said one Sydney-based reseller. "Look at their tax records -- they aren't innocent by any means."

Computer Etc's Burraston claimed that he has previously referred matters to the Business Software Association or the vendor involved and been told -- allegedly by a Microsoft legal representative in one instance -- to keep his mouth shut. Other retailers have even noticed branded trucks of major distributors they deal with being used at such markets.

Jim McNamara of the Business Software Association said he doubted his staff or the staff of his vendor financiers would ever respond to complaints in such a way, and encouraged retailers to contact the association with information about evidence of piracy. The problem, he said, is that his organisation can do little to help in the matter.

"We are definitely concerned about the markets," McNamara said. "But we don't have the arms and legs to tackle this alone. We don't have a large field staff to raid every market. What we can do is lobby in Canberra and put pressure on the Federal Government to get more police involvement."

One reseller pointed out that there is a place for markets and auctions, such as those held by distributors like Tech Pacific or vendors such as Compaq. But if the less-reputable markets are not cleaned up soon, legitimate resellers will also start resorting to unscrupulous activities in order to compete.

"There is pressure on people to do the wrong thing when they see other people doing it," he said. "It's a billion-dollar fraud industry."

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