Franchised reselling

Moving towards online sales is not new to most resellers. But so far e-tailing has failed to significantly crack the corporate market. Now there is a company that says it can do just that - and what's more, it wants to franchise the model.

Two years in development, Ask Distribution has built an online catalogue business that provides pricing, availability and delivery of over 20,000 IT products to corporate customers around Australia. With over 6000 large corporate and government departments already buying from the system, Ask Distribution is looking to franchise the model to individuals across the country.

Ask Distribution began four years ago as an importer of notebooks and PCs, only to watch its margins erode to nothing. Then three years ago, founder Gideon Ellis and partner Romi Korb began designing a site to service the big end of town without the hassle and overheads associated with a traditional distribution/reseller business.

The online catalogue is aimed at IT managers or procurement officers who can log on to the system and search for whatever products their company needs. The site provides competitive products from all major vendors, in categories including hardware, software, licensing, accessories, consumables, warranties and training books.

The back-end of the Ask online catalogue is linked directly into the back-end of 12 leading national distributors and processes the order automatically.

Fifteen months since its launch, Ask Distribution is currently selling $8 million worth of product per year, and Ellis is ready to sign on with franchisees in various regions.

At an up-front cost of $15,000, an individual can purchase an Ask Distribution franchise. This enables them to use the Web site and its back-end database to sell to a designated set of customers. The franchisee is required to look after his or her customers, answer any technical questions and recruit new business.

Ellis claims the franchise model is geared towards IT professionals who can leverage their experience and customer contacts in the industry while working for themselves out of a home office. And with the number of middle management layoffs in the industry, Ellis is confident there are a number of people looking for this type of solution.

Ask Distribution has opted for the franchise model over employing account managers and setting up presences in various states because it is difficult to find good people and expensive to maintain branch offices.

"Why not hire people - well, can you find them?" asks Ellis. "A franchisee is expected to sell between $3-5 million per year, which is very obtainable. Why would you want to employ someone for $60,000, rent an office, hire an office secretary and so on if you can offer franchises where people will earn $125,000 working for themselves."

Despite the fact that it is an online catalogue and not subject to geographic limitations, Ellis claims that from a psychological and customer support perspective, it is important to have a local presence with franchises.