Your front-page article "Deal direct or you're out" (ARN, April 7), regarding Harvey Norman's decision to boycott suppliers that are moving towards a direct-selling model, raises some interesting points.
The decision by large vendors such as HP, Compaq and IBM to embrace a direct model is in response to the success achieved by Dell. What these vendors do not understand is that it would actually cost them more to establish and maintain the direct-selling model than it does to continue to use large retailers such as Harvey Norman and system integrators such as Select Approach.
It will actually cost these companies business rather than enhance business by taking market share from Dell. This comment applies globally as well as locally.
To simply copy Dell's model shows that these vendors are bereft of ideas. They miss the point about why Dell has been so successful - it sells good-quality equipment, has quick delivery and fair prices. Dell falls down in the area where all tier-one organisations fall down: the backup and servicing of the smaller-business customer and the home user. All of these organisations are geared to provide quality and timely support to the medium-to-large customer. They may dispute this but their rhetoric is at odds with reality.
Level of service
The backup and servicing of customers of all sizes is where the distribution channel provides a level of service that Dell can't hope to match.
To discount this value is to throw the baby out with the bath water. How do tier-one organisations think they get their major business? It is channel partners such as Select Approach that make a major investment in the customer to understand their needs while promoting product that both provides tier-one suppliers with a very important interface layer to the customer and generates significant business.
This increases the goodwill that the customer has for the brand being offered.
These ideas are cyclical. The major brands have tried dealing direct previously, come out with lower market share than before they started, and then cynically turned back to the channel to get their sales up again.
If tier-one organisations want to compete with Dell, they simply need to address the issue of delivery lead times since their quality and pricing is already competitive.