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No new freight fees for Tech Data Canada

Distributor's Canadian president encourages partners to move upstream to more complex offerings

Not long after Ingram Micro announced it will increase freight charges next month in response to rising fuel and transportation costs, Clearwater, Fla.-based Tech Data also announced much of the same. In Canada though, Tech Data’s Canadian president, Rick Reid, said the company has not made any decisions about introducing new fees, but hopes to make a decision around this by the fall.

As of Oct. 1, Tech Data will be tacking on a $2 handling fee on all orders except for purchases made on software licenses, warranties and services. Reid said while Tech Data Canada will not be introducing these fees as of yet along with its U.S. counterpart, he said its Canadian operation is not ruling out the option.

“We’ve never always done exactly what the U.S. has done,” Reid said. “We’re considering all of our options. We need to look and see what our competitors are doing. To suggest that we wouldn’t take advantage of these freight charges if our competitors are would be ludicrous.”

However, if push came to shove and Tech Data Canada were to introduce handling fees and/or other freight charges, Reid said the distributor will not be using those fees as opportunities for the company to gain more margins.

With a weakened economy and a decrease in the average unit prices on certain solutions and products such as notebooks and desktops, Reid said distributors and resellers alike are now noticing an increase in their operating costs.

“If the distributors are all comparably priced then the reseller will start looking at other things instead of just the price,” Reid said.

Just last week, Tech Data released its second quarter results for the Fiscal 2009 year. The distributor’s net sales saw an increase of 9.8 per cent from its prior-year period. Reid said in Canada, Tech Data continues to do well in areas such as the server, networking and software markets. What could use more improvement though is its storage business, he said, as this area did not do as well as Tech Data Canada had hoped it would this past quarter.

For the Canadian channel, Reid encourages partners to move away from just selling hardware, to instead moving upstream and selling more complex offerings to end-users.

“Revenue growth hasn’t been as rapid as it has been in prior years,” Reid said. “That’s because technology has become more complex and the average selling prices of units are now being reduced. I think anything to do with application software, software services, SaaS and HaaS would be an important move for resellers to make today. Verticals that tend to do well today are the government, healthcare and education marketplaces.”