These are interesting times for the distribution market in Ireland. That is not to say they haven’t been interesting before, but there seems to be a definite trend emerging with the appointment of Computer 2000 as an HP distributor for Ireland and the revelation that Clarity has moved nearly all of its warehousing and invoicing activities back to its British parent, Westcoast.
It’s not that long ago when UK-based distributors were setting up operations in Ireland with ambi-tions of building a strong presence here. And it was not much later before they were beating a re-treat back from whence they came.
Things began to change in the past two years or so when Westcoast snapped up Clarity, one of the two biggest indigenous IT distributors in Ireland. While it made sound sense to run the two busi-nesses separately in the short-term, the case for consolidating back office and logistics functions was pretty compelling. It should have been obvious right from the point where Clarity started offer-ing Irish resellers access to stocks held by Westcoast and promoting that as a significant advantage over local rivals in terms of scale and availability.
Meanwhile, C2000 – one of those distributors that came here and then went back – has adopted a very different strategy to Westcoast’s, opting for an approach based on telesales and the web with a limited local presence of two field sales people. The plan appears to be working. Last year, C2000 assumed responsibility for the logistical functions for supplying desktops and notebook computers into the Irish market for Fujitsu Siemens Computers.
Further evidence of the strategy shift comes from comments by Martin Cullen, head of HP PSG in Ireland, who told Irish Computer that C2000 had already built up a significant business supplying HP product to the Irish market without being authorised. A view endorsed by Alice Smitheman, C2000 product marketing director, who claimed sales had grown “substantially”.
The appointment of C2000 as an authorised distributor, coupled with the termination of HP’s long-standing distribution contract with Sharptext, send out pretty clear signals about where the vendor thinks it’s going in terms of the Irish market. This is reinforced by Clarity’s decision concerning back office and logistics. Essentially, we have reached a situation where supplies into Ireland of product from the world’s biggest PC company are going to come from the UK.
There are potential pitfalls to this approach. The much-vaunted importance attached to the personal touch in the Irish market appears to be losing its potency, judging by the success of C2000 to date, but it may well become more important in tougher times. There is understandable anxiety that Irish resellers may find themselves losing influence if the distributors they are dealing with are not local entities devoted to the Irish market but, rather, large multinationals with much bigger fish to fry.
There may be some issues with delivery, especially if transport links between the two countries are disrupted by bad weather. Also, in terms of priority of supply, can Clarity and C2000 guarantee that Irish resellers will get the same availability as UK-based resellers in times of tight supply?
Concerns have also been raised about the credit which would be available to the Irish channel. Es-timates suggest as much as EUR*45 million of credit for HP purchases has been sucked out of the channel with Sharptext’s withdrawal, so it will be interesting to see how C2000 and Clarity address this shortfall in such straitened times – especially as both distributors are already likely to have many of the resellers that dealt with Sharptext on their books. If you reduce the available credit lines from three to two, logic suggests the pot will be smaller, but it may well be that C2000 and Clarity will absorb the difference.
If the HP strategy is successful, we could be one step further towards a scenario where Irish dis-tributors will operate as sub-distributors, applying a layer of local sales and marketing expertise, while the larger multi-nationals will become warehousing and logistics operations for the volume vendors. With companies like HP anxious to push for scale in their distribution activities, consoli-dating and reducing the number of companies they engage with to fulfil their logistics to the chan-nel, this appears to be a logical conclusion. Billy MacInnes
Ltd
