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Ingram/Tech Pac: Competitors raise reseller concerns

Ingram/Tech Pac: Competitors raise reseller concerns

Distributors are predicting the impending takeover of Tech Pacific by Ingram Micro may spell bad news for many Australian resellers, pointing to shrinking credit limits and a smaller pool of suppliers as potential evils.

While the consolidation of two big players should prove positive for rival suppliers, Express Data managing director, Ross Cochrane, said the reseller community could suffer.

"Credit limits and choice of suppliers will be the biggest concerns for resellers," he said. "They need credit because their customers are demanding it of them and you have to ask whether the new single entity will consolidate or provide the combined limit of the two previously separate companies."

Similarly, Avnet managing director, Colin McKenna, said resellers of both parties should be concerned about the implications of the new merger on their buying power.

"A number of resellers trading with both organisations from a volume perspective will be thinking about what this means for their credit limits - two and two will not equal four," he said.

BCN managing director, Ken Lowe, said those resellers who shopped around for the best price, product, availability or terms and maintained relationships with a wide range of suppliers had the most to lose.

"When two distributors merge, it could mean the combined credit limit [of the reseller] goes down," he said.

Brightpoint executive director, Felix Wong, agreed the biggest challenge of the deal would be the limitation of choice for resellers.

"Today, resellers can go and get different prices, or have different credit ratings, or can choose to go with a distributor based on their treatment of their business," he said. "There won't be so much option anymore."

However, most distributors viewed the takeover as reducing the number of players competing for the channel's IT procurement needs by one: good news for any organisation wanting to build its customer base.

"From our point of view it is positive because it could create opportunities for other distributors," BCN's Lowe said. "For example, if Tech Pacific was carrying a tier-one brand in a product category and Ingram Micro was dealing with a competitor, those vendors might find there isn't the same interest under one umbrella."

Express Data's Cochrane also saw the deal as favourable for other distributors.

"It means there's one less competitors for the existing players in the game and for vendors to choose from when it comes to getting market coverage," he said.

For a more specialist distributor such as Brightpoint, there would be many new opportunities to sign up vendors who would not be as happy dealing with the larger merged organisations, Wong said.

"They are broad-based distributors now - they would be really broad-based when they're smacked together," he said.

But Firewall Systems CEO, Scott Frew, said the added weight and international scope of Ingram Micro could also result in problems for specialist distributors such as his own company.

"From the wholesale side, Ingram Micro is a massive US company," he said. "If they leverage those connections to get products we are trying to grow it could be detrimental for us and other niche distributors."

For more on this story, check out next week's edition of ARN.


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