Grey-marketing good for growth: distributor

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Distributor Dynamic Supplies has challenged IDC’s claim that grey-marketing has slowed growth in the printer consumables market, suggesting that the research firm’s figures mainly reflect OEM shipments.

Distributor Dynamic Supplies has challenged IDC's claim that grey-marketing has slowed growth in the printer consumables market, suggesting that the research firm's figures mainly reflect OEM shipments.

IDC Australia analyst Su-Lin Ng has said that grey-marketing had 'significantly impacted' consumables shipments in Australia, causing that market to grow slower than expected -- by 4 percent to 14 million units shipped -- in 2003.

Kerry McKevitt, financial controller at Queensland's Dynamic Supplies, said the fact that vendor shipments had grown more slowly did not mean the market as a whole had suffered.

Rather, grey-marketing and its resultant downward pressure on prices had likely lifted printer consumables sales across the board, he said.
'The parallel importing sales are not being included in figures because they can't get access to the numbers of people that are really doing it,' McKevitt said. 'It's driven by demand. Demand, in our experience, hasn't dropped off.'

Dynamic Supplies itself is a parallel importer of printer consumables and believes there to be nothing wrong with the practice, he said.
'IDC ... needs to have access to figures from the grey-marketers and what their growth has been, which is tremendous. We have experienced massive growth,' McKevitt said. 'Our growth this year was around 25 percent.'

Ng has said that the strong Australian dollar made purchasing terms from overseas more favourable for grey marketeers or parallel importers, which had affected unit shipments growth in original printer consumables.

Ng could not produce any figures that reflected the amount of grey-marketing but had based her claim on feedback from vendors and the channels, she said.

McKevitt said the competition had to be good for the market overall. However, major hardware vendors could see sales slide, he suggested.

'We think the price thing, for the likes of HP and that, and Canon and Epson, is going to be squeezing the life out of them,' McKevitt said.

Jackie Yeung, analyst at IDC's main rival Gartner in Hong Kong, said that whether grey-marketing was a good or a bad thing depended on one's perspective.

'In my opinion, there are two sides. One is the benefit for the customer in the local market because they enjoy special prices. But, on the other hand, I think it is not very healthy,' he said.

Yeung said the phenomenon could upset local business which got undercut by grey-marketeers. Also, parallel imports sometimes did not have the same support or warranties as product sourced via standard channels so could be risky for the customer, he added. 'But the main reason for grey-marketing is the pricing issue,' Yeung said.

He said vendors could fight grey-marketing by adjusting their strategies both in-country and overseas to create more uniform prices. Vendors could send letters out to resellers and adjust their channel program to keep better tabs on their partners -- as HP and others had recently done in Australia.

'Some partners in other countries might get a low price, but they might not know that their customer will resell to another country to gain benefit from a different market,' Yeung said.

IDC had declined to comment further on the research at press time.

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