Special pricing has been a sharp thorn in the side of Tech Data. And Steve Raymund, chairman and CEO of Tech Data, has been one of the more outspoken critics of special pricing--also known as ship and debit--because of the escalating administrative costs that result when product prices are adjusted after the shipment goes out. In fact, the Global Technology Distribution Council recently estimated the annual cost of special pricing to be more than $30 billion.
So Tech Data teamed up with IBM this summer to combat the issue. At Tech Data's recent TechSelect conference in Chicago, the distributor introduced an e-business initiative that streamlines pricing changes and gives Tech Data the ability to quickly verify and process special-bid pricing for all IBM systems. Tech Data now has access to IBM's daily special-price offerings, which, in turn, allows resellers to check the latest bid pricing and get up-to-date information about IBM's systems.
"We both recognized the problem of special pricing, and we wanted to deal with it in an automated, cost-effective fashion," says Ken Lamneck, Tech Data's president of the Americas. "IBM is one of our top vendors, and it has done an excellent job making progress on this issue."
Under terms of the initiative, Tech Data has integrated IBM's special-bid pricing data into its own product-pricing system. Thus, when resellers get a special pricing offer from IBM, they can contact Tech Data, which confirms the offer, and get the same price instantly. The plan is beneficial for both Tech Data and IBM in that it reduces unnecessary administrative costs, as well as for VARs, who can access low prices for IBM's systems through Tech Data much easier.
Lamneck says he hopes the joint effort with IBM will help encourage other vendors to make similar progress on the issue of special pricing. Sam Ruggeri, president of Advanced Vision Technology Group, a solution provider based in Hauppauge, N.Y., says IBM has been a great partner for the TechSelect organization.
"They've really done an outstanding job of becoming a true channel company over the past couple years," Ruggeri says. "They've got our back."
Also at the conference, Tech Data launched additional benefits and offerings for its TechSelect organization, an exclusive group of SMB-focused resellers, including an e-commerce service offering for solution providers' Web sites and an agreement with Sun Microsystems for software. The former, called the DataPaq Select service, gives resellers product information, pricing data and related data for each product offered by Tech Data. The information is updated daily and formatted for quick downloads to resellers' sites.
John Tonnison, vice president of worldwide e-business for Tech Data, says DataPaq Select is easily integrated with VARs' existing e-commerce systems. Tonnison also says the distributor already has 30 resellers up and running with DataPaq Select.
"It's a perfect fit for TechSelect members," he says. "Tools like this allow the end users to have more control over their purchases and gives the resellers more face time and exposure to the customers."
Tonnison says DataPaq Select helps resellers streamline the sales and ordering processes, lets them create customized product listings for specific clients and enables them to develop Web-search solutions. DataPaq Select also aims to help solution providers manage their margins better by including MSRP information and corresponding Tech Data-specific pricing.
Last but not least, Tech Data announced an expanded agreement with Sun that now includes the Sun Java System software portfolio for Tech Data resellers. The Sun Java System includes operating systems, applications and the latest Java versions, and consists of Solaris and Linux software for Sparc and X86 platforms and the N1 network software platform.
Critics were initially skeptical about Tech Data's renewed alliance with Sun, primarily because the broadline distributor didn't appear to be a good match
for Sun's struggling enterprise products. However, Tech Data officials say Sun has enjoyed a resurgence in the channel
and that TechSelect has helped the computer maker move down from the enterprise market and reach much-needed SMB accounts.
Just as it has done with its recent EMC alliance, Tech Data has established a renewed relationship with Sun and helped turn the enterprise vendor with a rocky channel history into a legitimate opportunity for its TechSelect VARs.
"We're pleased with the progress in the Sun alliance," Lamneck says. "Sun is more involved with the channel than ever before, and that's great for us."