Shifting Sands of distribution

Shifting Sands of distribution

Despite analysts' attempts to pin down the phenomena, the only thing failing distributors seem to have in common is an excess of red ink on the bank balance.

According to Gartner's Bertram, the hourglass effect will take out mid players and see the high and small end soak up the void.

However, a quick review of the year's events shows that distributors of all sizes and shapes have fallen victim to shifting channel sands. When Edge Technology Group collapsed in June, most of the blame was placed squarely at the feet of sibling company ISP eisa. Maverick businessman Johnson Wang had gone from relative obscurity to appearing as a major player in the Australian business when eisa pitted itself against Telstra for the purchase of OzEmail. When the bid failed, Wang decided to take an impromptu holiday and Edge was sucked down with the rest of the "would-be" IT emperor's realm.

When it was finally hung out to dry in the last days of May, Dataflow's fate was generally attributed to a series of disasters culminating in the botched implementation of an ERP system. Growing pains was actually given as the cause of death for the $89 million distribution business.

September was a difficult month for smaller companies such as software distributor TradePlus International and imaging hardware distributor Performance Sales, both of which went out backwards in what is traditionally a slow month.

And the year was capped off with the closure of Toowoomba's QLD IT. Like its significantly larger counterpart Dataflow, the regional distributor ran into difficulties after moving to larger premises and significantly expanding its market.

A difficult year for distributors, 2000 has also seen Sealcorp become Broker, Tech Pac turning to the ASX and CHA left wavering on the point of being taken over by Quadtel.

At this stage, there is little to indicate a clear pattern, however the overall prognosis does not seem good for the over 600 distributors in an industry characterised by continual change.

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