In a surprising move, a U.K. distributor is actually giving credit away to resellers. This begs the question: why?
Computer 2000, otherwise known as C2000, is the U.K. arm of Tech Data, and it’s pumping £4 million – that’s more than $8 million – of credit into the channel.
Rumour has it that the U.S. credit crunch is starting to take its toll on the IT industry, though many deny this. But it’s pretty hard to ignore the ever-weakening U.S. dollar. I was shocked to see my last credit card bill, where my purchases from a recent trip to the U.S. were converted into Canadian dollars – and were almost the same amount.
While this might bode well for a Canadian shopper buying shoes at Macy’s in New York, it doesn’t bode so well for the tech market.
For distributors here, in the U.K. and other parts of the world, there’s some concern of an economic recession and how that might play into the channel. But if they’re feeling the pinch, disties aren’t admitting it.
And maybe it’s not all that bad. Debts for tech firms look set to grow, according to analysts at Standard & Poor’s, although credit trends in the IT sector have shifted to fairly balanced but positive this year from negative last year.
Still, there’s a lot of uncertainty hanging in the air with the state of the U.S. economy, and we will most certainly feel any dips up here in Canada. This could make it tough for distributors and resellers alike, with the potential for reduced margins – turning credit into a big issue again.
So we might see a few initiatives in the channel – such as C2000’s credit injection – to keep business running as smoothly as possible, even if we’re about to hit a few bumps.C2000 is negotiating terms with resellers who previously had cash-with-order accounts.
But the distie isn’t saying whether this has anything to do with the current economic climate. Instead, it says it wants to make it easier for smaller resellers to take advantage of the services and support it provides (such as sales support and marketing).
And it’s hoping this will encourage them to do more business with its three biggest vendor partners: Cisco, Microsoft and HP.
Still, timing is everything – and this initiative comes at an uncertain time. So perhaps we’ll see more of these initiatives from other disties.
But some industry insiders believe economic conditions are simply returning to normal after an upturn. But, even if they are in for a recession, if they’ve already survived the dot-com bubble burst, this should be a piece of cake.
