A Newcastle-based reseller contacted me last week expressing some concerns about the flourishing "computer fair" scene in the Hunter region and the impact it is having on the existing channels in his area.
His alarm centred around the fact that the GST was supposed to weed out the industry's dodgy dealers, yet they all appear to be back in force at these computer markets which occur at regular intervals.
Along with some legitimate traders, there are a large number of cash merchants selling all manner of stock at incomprehensibly low prices. The suggestion has even been made on more than one occasion that some of these operators look suspiciously like they are money laundering.
According to the Newcastle source, truckloads of stock are rolling up the freeway from Sydney on the designated dates - two to three times a month - and being dispersed to all range of punters in a manner befitting any great bazaar you care to mention.
The bad news is that it is hurting the traditional dealer and the VAR channel. It was estimated that "conservatively $500,000 a month" was being turned over at these markets in the Newcastle area alone. If sold at recommended retail prices, there could be as much as $1 million worth of trade lost to the local retail industry.
Newcastle is just one example of the increasing proliference of this "grey" market. Here they occur at the local showgrounds or in the car park of one the city's larger licensed clubs. The unaccountability starts at the door. There is always someone there taking $2 cash off every person who walks in and much more for the stall holders.
You can find these computer fairs in every major population centre at regular intervals and the Tax Department is rudderless in its pursuit of the participants. North Rocks in Sydney is a popular location, while Brisbane's scene almost resembles a rave party circuit, with locations revealed in the papers a few days before they occur.
It's all very sus', highly unaccountable and largely unmonitored, I suspect, as well. No receipts. No record. No cheques. No money trail. No worries.
Perhaps the Tax Office is otherwise distracted by the mechanics of managing BAS returns and other GST issues or perhaps the scale of the activity is beyond the resources of our leaner, meaner public service. It is surely easier to keep the legitimate channels on their toes than pursue the Arthur Daleys of the trade.
Anyone working in the channel who has never been to one of these markets should do so - it's an eye-opener.
What you will see is that not only do these markets offer prices cheaper than you can obtain at the nearest legitimate retail outlet, but they are also often cheaper than resellers can buy them from their preferred distributor.
We are not talking here about old or obsolete stock either, but the very latest PC/server components, monitors, printers, packaged software, you name it. All for sale at a "special price" as the street hustlers say in Bali.
Of course, the big question is "where is all the stock coming from?" The answer is not quite as easy to arrive at.
No one really wants talk about it and distributors desperate to keep money rolling over will part with stock to anyone that rolls up with the appropriate cash or credit status - even if it is a truck at the back door and wads of used $50 notes. I suspect that often it is distributors themselves fronting at these shows with a large truckload of stock and a wheeling and dealing mindset. Anarchy appears to rule in this channel.
I would love to hear what you know or feel about this murky area of IT distribution. Is it a legitimate channel or should it be more closely monitored?
Gerard Norsa is the editor of Australian Reseller News. Reach him at firstname.lastname@example.org