Buying direct - The real costs

Buying direct is quicker and cheaper than buying through the channel if certain vendor statements are to be believed, but now...

Buying direct is quicker and cheaper than buying through the channel if certain vendor statements are to be believed, but now research has thrown this into question.

Any suggestion that buying indirect is better than direct is naturally welcomed by the channel, and the response to the IDC research carried out on behalf of reseller giant Specialist Computer Centres has been overwhelmingly positive.

At a vendor level, Hewlett-Packard is not alone in trying to put a message across to users about the benefits of buying through the channel. Across the channel, many FTSE 100 companies are being approached and directed towards resellers.

Buddie Ceronie, area sales director for the UK, Ireland, CIS, Middle East and Africa at 3Com, points to the activities of its Direct Touch sales team, which goes to large corporates with the aim of generating leads for resellers. The 25-strong team is busy visiting large enterprise customers to open doors for the channel.

Real efforts are also being made elsewhere, with the support of major indirect vendors, to target direct-buying accounts and bring them back to the channel.

Some of the activities of reseller ITP, which is running a campaign to remind users of the delivery problems that can be associated with direct orders, are a taster of the current attempts in the channel to counter the direct selling arguments.

Good news in bad times

For those vendors that have worked hard to cultivate, train and establish a channel, any hint of a swing against direct sellers is a filip in the current tough trading conditions.

Ian Snadden, director of channel and SME sales at Fujitsu Siemens, says the research confirms his own belief that costs can be higher over the lifetime of equipment. “[The hidden costs in the direct model] do not come as any surprise to me. The price [direct vendors] put out is deliberately attractive, but does not have all the elements involved, so users have to buy up, which costs money.”

The next challenge, of course, is to make users aware of the research and encourage them to move away from buying direct.

“Resellers build a lot of value into their offering which they do not necessarily charge for, whereas with the direct route, the customer does not consider the extra costs until after they have bought, and then they rarely track them and work out the overall cost,” Snadden adds.

The message will be delivered through the sort of advertising that resellers such as ITP are currently running, and by the major vendors, but it is going to be difficult getting users to move away from basing their buying decisions on price alone.

That was the argument put forward by the one direct seller prepared to talk to MicroScope about the research.

“The benefits of buying direct are that customers get exactly what they want, at the best price, because there is no resellermark-up,” argued a spokesman for Time.

Let battle commence

Across the channel, the battle lines are being drawn, and after years in the shadow of direct selling giants, which have convincingly argued they can deliver quicker and at cheaper prices, the channel has improved its logistics and is in a position to compete.

If arguments about price can be defused by the IDC research, which proves the costs are in fact higher when buying direct, then the rest of this year should be an interesting time for those in the trenches on both sides of the channel conflict.

“We have brushed up our logistics and now have bar coded slick warehouses and a network of resellers, which means we can promise next-day delivery for our vendors with qualified competent installation through a reseller,” says one distributor. “We are at the stage where we can out-direct the direct players.”

Added to logistics and installation improvements, the channel has reached the levels of expertise — through training, seminars and roadshows that nearly all distributors make available to resellers — which put it in a strong position. And armed with the IDC report, the channel now has very strong arguments too.


The story that sparked it off

Research carried out by IDC indicates that over the lifetime of a PC it is cheaper to buy through a channel player that can offer desktop lifecycle management.

The price tag on a direct piece of equipment appears to be cheaper, but in the long term the costs of maintenance and support mount, and the channel is best placed to meet the demands customers may have for their equipment.

The IDC white paper - PCs are not paper clips. Is your technology procurement strategy costing you money? - estimated hidden lifetime costs of running a desktop at £225 per PC.


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