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Distie competition gets fierce

Tech Data Canada chief believes competitors are performing irresponsibly in the market

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Tech Data Canada’s president did not mince words voicing his concern about his competitor’s tactics in the market place.

When asked how Tech Data Canada was performing financially, Rick Reid said, “”We are finding it more difficult to grow and to be profitable under the constant irresponsible

performance from our competitors.”” The distributor has performed well under the circumstances, he said. This month will mark 12 consecutive profitable months in a row for the Mississauga, Ont.-based distributor.

But when pressed Reid confirmed that Synnex Canada is one of those competitors performing irresponsibly among others.

“”From a price perspective it is not a matter of growing revenue anymore,”” Reid said referring to Tech Data’s competitors taking turns at cutting prices. “”They need to be responsible and grow along with the market and take their margins from there. Instead, it is about growing revenue for the glory of growing revenue.””

Reid said he hopes Jim Estill, who takes control of Synnex Canada at the end of the month or early October, will end what he calls “”irresponsible performance”” by the distributor. Last July, Estill, the current CEO of EMJ Data Systems Ltd. of Guelph, Ont., entered into a merger/alliance with Synnex Canada in an all-cash public takeover deal worth about $56 million. Part of that deal would see Estill as CEO while Mitchell Martin remains president of Synnex Canada’s broadline distribution business.

“”I believe Jim (Estill) will be very responsible (when he takes over at Synnex Canada),”” Reid said. “”He has been very responsible with EMJ and with every indication I have, his intelligence will (transfer over) to the new company.””

He said the market has turned a corner in terms of earlier downward trends towards profits, and while Tech Data Canada has enjoyed almost a full calendar year of growth, Reid said the years of 20 per cent plus growth has been replaced by single-digit growth.

He said distributors need to keep costs down during a these tough times. But, Estill chalks up Synnex’s tactics to plain old fashioned competition.

“”There is a healthy competition amongst distributors; always has and always will. And, it is to the benefit of the reseller,”” Estill said in response to Reid’s comments. However, he said distributors need to be highly effective and profitable. Still, Estill does not foresee any changes to Synnex Canada after he officially takes over.

Frank Abate, president of Infinity Technologies, a VAR based in Mississauga, Ont. said Synnex has a good costing structure. “”I can tell you I had one vendor say if Synnex is doing all that good work for you at a cheap cost you would be a fool to turn it down.””

Abate said he sees all main distributors being aggressive in three areas: point of purchase, support services and rebates.

“”(Synnex) is not any more aggressive than Ingram Micro or Tech Data,”” he said. Abate admitted his company has an on-site rep from Synnex, but still believes the market place dictates price.

Estill said it’s up to the reseller to determine costs.

“”There is always one distributor lowering prices on one line and it seesaws back and forth. It is what it is and margins are low as it is. It does not hurt the reseller at all. You tend to have line-by-line and item-by-item,”” he said. “”And I know Synnex has the best price on certain items today and so do the others, and it depends on our resellers to evaluate the cost.””

Estill said even in this competitive environment there is room to grow.

Mitchell Martin was asked for his comments for this story, but could not as of press time.