In an attempt to lower its retail prices, hardware vendor Acer has given all its wholesalers the brush and embarked on a direct-to-resellers distribution model which its former partners suggest is doomed for failure.
Official Acer distributors Siltek, CHA, IT Wholesale and Alloys International were all given 60 days notice this week that existing arrangements will be null and void and a new one-tier model implemented. The notice came with an invitation to apply for gold partner status along with resellers who will also be eligible for direct relationships with the vendor.
Acer's decision to put even small resellers on the same price list as them has been met with bemusement by the vendor's former wholesale partners.
Bruce Harvey, CEO at Siltek, said he was shocked with the sudden and cold manner by which Acer terminated its current distribution agreement. He is also adamant the decision by the vendor to bypass distributors is an "ill-informed" one that is "doomed for failure".
"Effectively they have told us they can do without us," Harvey said of the letter which advised him of Acer's channel model change.
Roger Bushell, managing director of CHA, went one step further saying it was the latest in a series of "odd" calls the vendor has made over a sustained period of time. He said Acer had been displaying ambivalence to the role of distribution in its strategy for quite a while.
James Watson, director Queensland distributor IT Wholesale was somewhat less fired up by the change to a single-tier distribution model. He did see Acer's move as clearly being an attempt to cull distributors, but he is confident Acer management will reassess their options and reverse the decision within months.
According to Acer, the decision will help the vendor grow in the Australian SME marketplace. The vendor intends to recruit a further 200 resellers by the end of October to work as Silver resellers, to help grow Acer's SME business. Its existing AAA resellers will automatically qualify for Gold status.
"After we viewed the business momentum of the last 18 months and our internal resources we decided to move more closely to the market dynamics," said its Oceanic Region managing director Charles Chung. "We asked, 'How can we assist resellers to promote our products?'. We decided to directly service the smaller reseller so we can enjoy the goods of our e-channel initiative.
"If over the next 12 months distributors want to join us as a gold reseller, we will provide volume quantities of certain products at roughly the equivalent of a dealer price. We are still waiting for a final decision from distributors, but we do hope some will stay on with us."