Alternative Energy: More VARs Bypass Distribution
Whalley Computer likely will increase its purchases through alternative sources this year, he said. “We need to be better at how we buy, rather than [buying] for convenience.”
olution providers have long complained that their customers seek lower prices after comparison shopping on the Web. Now many are doing the same thing.
More solution providers this year are buying products from sources other than distribution vs. 2003, according to the CRN 2005 Sourcing Study. These alternative sources range from the specialty distributors to national resellers such as CDW to retailers including CompUSA to auction house eBay.
“More and more people research online and feel comfortable purchasing online. Once you’ve found a store or a site that you enjoy or trust, you bookmark it,” said Howard Tong, vice president of marketing at Newegg.com, City of Industry, Calif.
While familiar sources CDW, Vernon Hills, Ill., and eBay, San Jose, Calif., claimed the top two spots as preferred alternative sources, newcomer to the list Newegg.com made an impressive showing when it came to performance. Among the alternative sources, Newegg.com finished first for products (which includes breadth and availability), price, information systems, logistics, configuration and integration, problem avoidance and resolution, effectiveness and loyalty. Insight Enterprises, Tempe, Ariz., was cited for human factors, such as technical knowledge and expertise of sales representatives, while PC Connection, Merrimack, N.H., was tops in credit.
Newegg.com doesn’t market directly to solution providers but welcomes their business, Tong said. “If you’re a small VAR and you need some components for a client, your process is to call two or three distributors, find out what’s in stock, the cost, and get some good information,” he said. “It can be an arduous process and if you’re buying onesy-twosy, you’re not getting the best pricing. You may have to cut a P.O. for one or two locations. The public is saying that. It’s not our intent to sell to [solution providers]. The customers made the choice.”
| AD | |
|---|---|
| id | unit-1659132512259 |
| type | Sponsored post |
As they’ve tightened their fiscal discipline, some solution providers say using alternative sources has become a habit of good procurement practices.
Whalley Computer Associates, a $70 million VAR based in Southwick, Mass., doesn’t buy from e-tailers or online sites such as Newegg.com, but its purchases through Arbitech, Laguna Beach, Calif., have increased to 15 percent of its total product business, said Paul Whalley, vice president at Whalley Computer.
Arbitech buys and sells refurbished and overstock products from manufacturers including Hewlett-Packard, IBM, Cisco Systems, Sun Microsystems and Microsoft at lower prices than distribution, according to Whalley. The company is now Whalley Computer’s No. 2 procurement source, after Ingram Micro.
“Everybody is looking at price because margins are so thin. Half a point here and there on $70 million is a lot of money,” Whalley said.