Vendors urged to set more realistic sales targets

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Vendors urged to set more realistic sales targets

Paul Kunert

The channel has called for vendors to start factoring the economic slowdown into their sales forecasts, which industry sources claim is on average five to ten per cent below expectations.

This means there is a serious risk that the UK partner community might not achieve some back-end rebates said Andy Gass, managing director at Computer 2000.

"A combination of some vendor rebate changes and a slowness to align targets to the current economic conditions is making us look very hard at how much rebate earnings we'll have overall," said Gass.

Only last week Ingram Micro confirmed it was passing on increased freight charges to resellers as fuel prices continue to rocket in Europe. Now arch rival C2000 has heavily mooted upfront price raises to claw back the potential loss of back-end margin.

"The big risk is that the overall back-end element is in danger and there may need to be some price re-alignment to reflect that I need to make that compensation elsewhere," he told Microscope.

If vendors failed to re-negotiate sales targets they would inevitably lose mind share among distributors and resellers, he added

Vendors have been slow to recognise changes in the market agreed Alistair Edwards, senior analyst at Canalys, but pushing ahead with price rises would not be a success in the current climate.

"[Lower rebates] is a serious problem for distribution," he said, "We haven't seen them move into a serious situation of losses but that may come. The fact is that the market is getting very tough and distributors are being pressured at all angles."

There is no current or planned programme to raise prices at Bell Microproducts said Graeme Watt, president of worldwide distribution, but he agreed the market was challenging.

"There is a risk around rebate," he told Microscope, "one risk is if vendors pull their belts in to adjust for market conditions and the other major risk is that vendors set unreasonable expectations."

Rebates are important to the entire channel and Martin Hellawell, managing director at Softcat said it had not gotten the feeling that vendors were not taking into account the trading climate.

"[Targets] will get harder to hit over the next couple of quarters," he claimed.

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