Altech Computers’ recent announcement it is taking on New Zealand distributorship of BenQ products raises further questions about the merits of non-exclusive distribution. (See RN, 28 November, “Bullguard’s Synnex deal dumps on incumbent Renaissance”.) BenQ has appointed Altech to carry its complete range of monitors, but incumbent distributors Datastor and Morning Star are also still on BenQ’s books, in spite of impressions that may have been given in certain quarters of the IT media that Altech is now the exclusive distributor.
“My understanding is that BenQ wasn’t necessarily happy with the numbers they were doing in the New Zealand market and decided that the next step in their market development was to assign another distributor,” says Kevin Hartin, Altech’s marketing manager.
Morning Star managing director Victor Ho, meanwhile, says his company continues to represent BenQ products in New Zealand. He was aware of Altech being signed up by BenQ, but says Morning Star has no plans to change its focus in order to compete.
“We’ll see how it goes. We’re forging ahead as we used to.”
Hartin says Altech has been interested in acquiring BenQ since last April and has been selling its products in Australia. New Zealand had been managed by BenQ’s Taipei head office, which had concurrently been talking with Morning Star. “In April last year, Morning Star was announced as the new BenQ distributor,” says Hartin. “As you can imagine, we were a bit nonplussed because we’d been talking all along with our people here in Australia, and they’re saying, ‘Yeah, yeah, we’re keen for you to do this in New Zealand,’ only to find out that they had been undercut by Taipei.”
Hartin claims BenQ’s subsequent appointment of Altech is the result of a combination of factors, including the latter’s strengthened market position in New Zealand and a larger reseller base. He makes the point that when Altech issues announcements, its press releases never make mention of other distributors, whether the agency is sole or otherwise. “That’s up to Morning Star’s marketing team to make sure that they get their two bob’s worth,” he says. “But we’re very careful – if it’s not exclusive, we will not use the ‘e’ word.”
While vendors always want their distributors to get behind their products, non-exclusive arrangements are a way in which they can play one distributor off against another. A staff member at one New Zealand distributor who requested anonymity, told RN that some vendors will never be satisfied with exclusivity.
“They’re going to want maybe two, maybe three distributors because it means that the market’s more hungry. They’ll hold more stock and be more competitive, because they’re trying to differentiate themselves from the other distributor. They may do things over and above selling the product to try and win that market, which in effect is adding value to that vendor.”
But non-exclusivity can be counterproductive. Altech’s Hartin says while vendors may not want their distributors to function only as a warehouse, but to proactively sell and promote the product, he also hints that a non-exclusive arrangement may prove more of a handicap than an advantage.
“We will consciously make a decision to be less proactive with products that we share, simply because our efforts and time and money are somewhat going to go to line someone else’s pocket,” says Hartin.
“So it becomes a bit of a ‘Catch 22’ between the distributor and the vendor, where we’re saying to the vendor, ‘If you really want us to go hard on your product, give it to us alone’. So long as you’re the only one in the market, you’re quite happy to put 110 percent behind it and reap all the benefits.”
Morning Star’s Ho says a multiple distributor constellation doesn’t make his company less likely to devote time and energy to a product line. “You have your goals and targets with the vendor and you have to meet those. Obviously, with multiple distributors there are always certain problems. The strategy with the supplier has to be right. We’ve been established for a while now as a distributor and have our own goals. Yes, you will see overlaps, but Altech is a relatively newer player, so they might be attacking a different customer base.”
Datastor sales and marketing manager Dave Rosenberg says it has developed a good market around BenQ and doesn’t tend to look at what others are doing, instead focusing on his company’s strengths.
“It’s all about ensuring everyone is doing the job well and having a great partnership.”
He says in some cases it makes sense for vendors to have exclusive relationships, in others to have dual or even multiple distributorships. “It’s not a cookie-cutter approach. If you believe in the product and there’s enough of a market there to grow in, we don’t look at who else has got [an agency], we just look at what we’re doing. Are we doing everything we need to achieve for ourselves, for the vendor and for the resellers? If the answer is yes, then they could have 20 distributors.”
In spite of his comments, Hartin says he isn’t concerned by the fact Datastor and Morningstar still represent BenQ in New Zealand.
“BenQ really fills a big hole that we’ve had in our catalogue, which is an LCD. Our relationship with Samsung, 12 months ago, had us chasing both Samsung and BenQ to get LCD products in our New Zealand warehouse, but because of existing relationships with both of those vendors we had to sit tight.”
He says Altech views the New Zealand market as an extension of what it’s doing in Australia, and ideally a distributorship needs to be trans-Tasman to be worthwhile.
“We’re not really in the business of going out and securing odd vendors for the New Zealand market. We don’t want to give our vendors the impression that we’re out just whoring ourselves to whoever will sell us product.”
Morning Star will not be issuing a press release to the effect that the company is still selling BenQ, contrary to any impression Altech’s announcement may have created in the market, says Ho.