Rick Reid, the president of Tech Data Canada, told CDN that D&H Distributing’s investment in the Canadian marketplace surprised him given his belief that the country is already over-distributed.He tempered his comments by saying that he believes D&H is a great company and that he has a tremendous amount of respect for the Harrisburg, N.J.-based distributor.
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There are the three majors and then there is Hartco, Supercom, and Westcon. We are well represented in Canada with top class distribution companies. It’s not just Tech Data. There are other great competitors doing a great job and it will be very difficult to replace them,” Reid said.
He firmly believes that Greg Tobin, the country manager for D&H Canada, does not intend to replace any one particular distributor, but to find a niche with non-represented products.
Reid said that he can see D&H competing with Tech Data on some level in the components and small peripherals space, but not in networking, systems, high end storage and the server business.
“I have learned over the years never to say never, but they do not have those vendors signed and those vendors have told me they are not going to expand beyond the three majors,” Reid said.
Gus Puccin, the GM of Oki Data Canada, agreed with Reid, saying that the IT industry in Canada and his own company for that matter is over distributed.
Reid does not believe D&H entering the market will start a price war among the distributors.
“D&H’s mode of operations is quite opposite. They are a high margin and high services distributor and I think that is their intent in Canada, but it will not be as easy in Canada,” Reid said.
Competitiveness and margin pressures, he added, are obvious in the Canadian marketplace and Reid has found, in his experience, that customers are not prepared to pay extra for incremental value add services.
“Often in a competitive environment a customer dictates and incremental services will loose out to lower prices,” he said.
D&H entering Canada has also led to mixed messages in the vendor community, Reid said in his opinion. Some vendors, he said, have lined up with D&H, while others are saying they have no plans of signing with the new distributor. However, in some cases the U.S. parent will tell those Canadian subsidiaries to sign up anyway and they will back down.
“D&H wags a big stick in the U.S.,” Reid said.“The large vendors such as Cisco, IBM, Lenovo and HP are already well represented in Canada. So how many more do we need?”
