PC World targets reseller business

Feature

PC World targets reseller business

PC World Business (PCWB) has thrown down the gauntlet to the channel with an audacious bid to become the UK's number one IT reseller to the SME market by 2004.

The company has set itself target revenues of over £1bn a year within three years — it expects business sales to hit £400m this year — using its network of outlets and growing services operation to begin targeting larger corporate accounts on a nationwide basis.

The aim is to build on its existing customer base, which includes Scottish & Newcastle Breweries and a handful of national retailers.

Chief operating officer of Dixons Group’s retail operation, David Hameed, claimed it had won business from both SCC and Computacenter and was already well on the way to making a bigger dent in the market.

Speaking at the opening of its new £20m headquarters in Bury, PC World Business managing director Derek Lloyd said the group had drawn on its own resources and those of its parent group, Dixons, to establish what was effectively a nationwide chain of VARs.

He claimed the company was alone in the UK corporate reseller market in being able to offer customers true multi-channel access through business account management, its catalogue operation, its PCWBD.com Web site and its 100 nationwide instore business centres.

To be number one
He added it had increased its headcount fourfold over the last year and doubled its warehousing space and range to cover some 23,500 individual products.

“We continue to leverage the benefits obtained by being part of the £400m buying power within Dixons — the goal is to become the UK’s number one IT reseller to the SME market,” he pledged.

Lloyd said the process of building the business operation — which began with the purchase of catalogue reseller DNCS for £25m in 1996 — was now complete and the group was going after SME business in earnest.

He realised competition in the sector was tough, but was unconcerned about the effect a major player like PCWB would have on small independents.

“I don’t consider my competition when I am trying to grow my business, what I’m more concerned about is my customers. If I kept thinking about other people I’d do something completely different. I’m interested in being able to grow the number of customers that actually deal with us and satisfy all of their needs,” he argued.

Previous news of PCWB’s expansion plans have been dismissed by competitors and analysts, because the group had neither the experience nor services capability to be an effective corporate player in both SME and large corporate accounts. But Lloyd believed it was no longer the case, as PCWB has improved and consolidated the services provided by its field operation PC Service Call.

“The services staff we have are consultative and operate in the pre- and post-sales support arena. By joining them together, it means customers get the best of both worlds. We can take systems right up to quite a complex level and deliver a basic service at their offices,” he said.

Lloyd added the services reach of the group could also meet the higher requirements of larger corporate customers through partnerships with a network of dedicated service providers.

“We work with lots of partners in this area and if a customer wants something like migration of Unix, then we engage someone to help us do it,” he said.

Lloyd readily admitted margins on the hardware sales that make up the bulk of PCWB’s revenues are low, but rejected the idea that 2001 was a bad year to be launching a fresh attack on the corporate market.

“In terms of volume, our revenues will clearly be made up mostly from hardware. This is not new for us and with an operation like Dixons, low margin hardware will not be a problem,” he said.

Simon Turner, managing director of PC World, was confident PCWB would build on its strong relationship with its vendors and would make further inroads into the top level account space through continued expansion of its services division — the company plans to hire 500 staff over the next five years.

“Increasingly, what PCWB can offer is going up the spectrum. We have absolute determination and the backing of a group that can invest and we are certain we can continue very rapid growth,” he maintained.

But the larger corporate players dismissed PCWB’s projections out of hand, claiming the group did not have the staff, scale or infrastructure to compete with them.

Not a threat
Mike Norris, chief executive of Computacenter, said he did not see PCWB as a competitor and had not noticed it in any competitive situations.

Eric Roth, market intelligence manager at ICL Multivendor Computing, did not believe PCWB could simply buy its way into the corporate market and asked why anyone would want to enter under current market conditions.

“It’s unpopular with market analysts and it’s hard to make a profit. Why is Dixons interested anyway?” he asked.

Reaction was also bullish from the lower end of the market. Alan Wallis, managing director of Bradford-based reseller Raven, responded: “My only reaction to this is to laugh — it’s got no services infrastructure.”

Peter Richards, managing director at London-based Hewlett-Packard reseller, Evans Business Machines, said if PCWB were serious about taking business away from VARs it would cause problems for everyone, but was not convinced it could do it.

“Most people’s dealings with PC World on a technical and customer services basis have left a lot to be desired. This doesn’t worry me because entering the market is not as easy as just putting a lot of money into it,” he said.


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This was first published in March 2001

 

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