IDC: Internet a threat to channel
- 23 June, 1999 13:05
A recent report from IDC indicating that the Internet poses a significant threat to the resale model of business held no surprises for the channel.
Figures from the industry analyst had direct-inbound PCs, which include direct marketing campaigns and Internet sales, up 60 per cent on this time last year. In comparison, sales through the channel increased a miserly 14 per cent for the same period.
Based on these figures, IDC formalised what the channel has known for some time: "Industry players need to review their business buying models, if they have not already done so," stressed IDC market analyst Rupinder Toor.
IDC believes the change apparent in sales models has been a response to customer demands and Internet-based commerce. Low margins and the relatively inexpensive costs of operating via the Web are other blows to the channel model of sales, according to IDC.
Citing the launch last week of Ingram Micro's Configure-to-Order facility and its focus on Web sales, as well Harvey Norman's Internet strategy and Hewlett-Packard's recently announced e-commerce strategy, Toor explained that last week epitomised the troubles the channel faces. "These activities illustrate the volatile nature of the channel, fuelled by the developments in the Internet arena."
However, Toor is not completely pessimistic and notes that "today's Web environment not only creates a need for change, but more importantly provides the stimulus for players in the channel to redefine themselves and take advantage of Web-based economic opportunities".