IT Wholesale has signed a distribution deal with NEC Computers and is on the cusp of securing distribution rights for Hitachi Data Storage mid-range products as the wholesale distributor moves to expand its SMB product offerings.
Under the NEC agreement, IT Wholesale will distribute desktops, notebooks and PDAs, as well as monitors, server and storage products.
General manager, Daryl Tucker, said the NEC business could generate between $4-6 million in revenue over the next 12 months.
According to Tucker, the NEC products not only offer good margins to both distributors and resellers, but also several sought-after features that were absent from its existing product lines.
“We decided to stock the NEC PC range because it offered a number of features, such as built-in floppy drives and serial ports, which other brand name models don’t,” he said.
“We only supply brand name products and we’ve found it’s more profitable for us to deal with the second or third-sized vendors [in terms of market share] rather than the number one because the margins are better — there’s more margin for us and our dealer base.”
Tucker said this business strategy was relevant across all product categories.
One of the reasons the company didn’t stock HP products was because HP would not supply them the distribution rights: “HP won’t give it to us.”
“A lot of people that deal with HP go broke,” Tucker said. “I think it’s because their expectations are so high, they have to change their targets in order to remain a distributor and they’ve got virtually no margin to maintain that distribution right.”