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Prion pioneers Web-only model

Prion pioneers Web-only model

Australia's first distribution company to be solely front-ended by the Internet will go into pilot in September. Called PCEZY, the company will be a spin-off from national distributor Prion.

"PCEZY will purely and simply be an Internet-only business," Prion managing director Michael Bosnar said. "It won't even have a phone number."

The electronic-commerce-enabled Web site is also likely to be the first in Australia to provide resellers with live information on the status of their orders and estimated time of arrival.

"The only way you can do this is if you have live information. Other distributors have electronic-commerce systems but none of them are live and they are all backed up by telesales operations," Bosnar said.

PCEZY will distribute consumer-based products like Hewlett-Packard Deskjet and low-end laser printers as well as consumables to the low end of the channel. It will target small resellers who don't typically do enough volume to warrant a direct relationship with the major distributors.

"This is not for Prion customers. Larger resellers want credit terms and conditions," Bosnar said.

"We will target that third and fourth tier. A reseller that does under $5000 per month finds it very hard to get a direct relationship with a major distributor. With PCEZY they don't have to turn to alternative brands or sub-distributors because they can source products like Hewlett-Packard directly from us. Our margins will be extremely competitive and probably better than what they're getting through sub-distribution."

Bosnar said there will be a minimum transaction of $100 which can be made via credit card or EFTPOS. PCEZY is trialling Telstra's secure electronic business-to-business commerce products Supply Express and Surelink.

Products will be delivered next day to anywhere in Australia, with the exception of very remote areas.

"The key to all this is you have to have an advanced warehouse and distribution model, as well as the back-end systems.

"We have made major investments in our back-end system and will be moving into two new warehousing facilities immediately," Bosnar said.

Prion has spent $2.5 million on a Baan ERP application at the back end.

Bosnar stressed that PCEZY was a separately run and managed business. Down the track Prion would investigate the possibility of floating the operation.

"There are 6500 very small resellers out there. This is a massive market and no one else is addressing it."

Bosnar said he believed there was still a place for the sub-distribution network, because he said there will always be some resellers who want to deal with "a warm body".

Prion signs IBM

Melbourne - Prion last week inked the deal that will see it distribute IBM's complete range of desktops, servers and notebooks.

Big Blue fills in the gap left by Compaq, which dropped Prion as a distributor during its rationalisation earlier this year.

According to Prion managing director Michael Bosnar, the addition of IBM servers and Think Pad fills out its commercial line nicely, while the Aptive range of desktops will be warmly welcomed into its consumer fold.

Bosnar said Prion expects to do $10 million worth of IBM business in the first year. "That's a conservative number," he said.

Despite the loss of Compaq, Prion is still on track to record revenue growth of 20 per cent - up to $132 million. Next year it hopes to break $160 million, Bosnar said.

"The loss of Compaq hasn't hurt us that much," he said. "Losing Digital hurt us more."


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