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Retailers pull out all stops to lure customers

Retailers pull out all stops to lure customers

AFTER introducing desktop PCs for under $1000 to the market, large retailers are now pumping advertising dollars into pushing deals on entry-level notebooks to woo small business users.

However, none of the sub-$2000 deals on notebooks offered by three major retailers and direct-selling Dell in March include business software, creating an opportunity for resellers to advise their smaller customers that although these offers appear attractive, they may not meet their business needs.

For example cut-price business retailer Warehouse Stationery was selling a Toshiba Satellite A10 laptop, bundled with a Canon S200SPX colour printer, optical mouse, carry bag, and a USB cable for $1912, but it is shipped with the Home Edition of Microsoft Windows XP.

The same applies to similar offers from Dell, Dick Smith and Big Byte, which means that once business software, such as Microsoft Office, is included, the price tag could be boosted by as much as $1200.

To determine if such packages meet their needs, small business or home office users with little IT knowledge require professional IT advice that may not be available at retail stores, say industry experts.

John Dunbar, managing director of distributor Ingram Micro, says unknowledgeable end-users could easily end up with products that do not meet their requirements.

“It comes down to resellers to ensure end-users are aware of what a package includes and what the differences between certain products are. It is a perfect way for them to up-sell and increase their average sales price,” he says.

Ingram Micro has recently introduced a range of Acer desktops that channel partners can sell under $1000 to assist its channel to meet aggressive retail pricing head-on.

Dunbar expects mostly small business and home users that do not need to network their machines to be attracted by the retail deals.

“People would need to be reasonably savvy to be able to set up a network themselves,’ he says.

Meanwhile, Mark Dasent of distributor Renaissance says New Zealand is following a global trend where small businesses go to large retailers for their IT needs.

“The mass merchant channel is strong across the board, but generally operate in a different market than resellers,” he says, adding both these channels are performing well.

Renaissance supplies both retail and reseller channels with Asustek notebooks, and according to Dasent pricing for the brand is structured to allow resellers and retailers to offer similar deals, but adds the higher profit expectations of retailers closes the price gap even more.

Nevertheless Dasent is concerned with smaller resellers that service the “mom and pop” market, saying resellers need to specialise to flourish. “There is room for them to offer advice and support that may not be available at retail outlets.”

However, Simone Iles of Pacific Retail Group says Business Solution Centres within Big Byte stores are aimed at SOHO and SME customers and are designed to configure hardware and software packages that best suit the needs of their business.

“We have consultants that go through a process to understand what the customer’s needs are and to recommend the appropriate bundle,” she says.

Iles concedes that advertised specials may not necessarily be the best solution for business users, saying such promotions are a marketing exercise designed to attract clients to the store. “Once they are in the store we can determine what package would best suit their business.”

She adds the chain may occasionally attract larger companies, however not in significant enough numbers to suggest there is a trend among such organisations to turn to retail outlets for large IT purchases.

Axon’s Scott Green agrees, saying the integrator focuses mostly on larger organisations and even though a significant portion of its income is derived from hardware sales, it has not come under pressure from retailers.

“We would even recommend smaller customers to places like Big Byte or Noel Leeming if they need lower-end gear that we do not deal with,” he says.

SIDEBAR

BELOW is an outline of how four comparative retail deals in March for notebooks under $2000 looked:

• Dell: Inspiron 1150 featuring an Intel Celeron 2.4 GHz processor and DVD/CD-RW combo drive at $1799 (excluding $99 delivery fee)

• Warehouse Stationery: Toshiba Satellite A10 featuring a 2.2 GHz Celeron processor and DVD/CD-RW combo drive, bundled with a colour printer, carry bag and optical mouse at $1912

• Big Byte: Compaq 2146 featuring an AMD Ahtlon XP 2200+ processor and a DVD-ROM drive, bundled with a HP PSC 1210 multi-function printer for $1999

• Dick Smith Electronics: Acer TravelMate 240 featuring a Celeron 2.5GHz processor, colour printer and optical mouse for $1999, with CD-RW/DVD combo drive

All these machines feature 256MB memory and 30GB hard drives and shipped with Microsoft Windows XP Home Edition.

The cost of software:

The recommended retail price for Microsoft Office is $899 for the standard version and $1199 for professional, while upgrades should cost around $549 and $749 respectively.

Microsoft New Zealand says only full retail copies of Office, and not OEM software that was pre-installed when the machine was bought, can be transferred from an old machine that will no longer be used to a new one.

Meanwhile, current retail and volume licences will cover one machine and one portable device, such as a notebook, provided the two machines are used by the same person and not at the same time.


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