Leading Edge Group in B2B play

Leading Edge Group - well known for its network of retail computer stores - is moving into the business market with a plan to recruit local system integrators and resellers to join its group of member companies.

The group has hired former FlowCom national channel manager Glen Young to head up a new division dubbed Leading Edge B2B.

Young's division would be offering marketing and promotional services for members, applying the buying power of 1300 Leading Edge stores and running conferences throughout the year for members to network with others in the group. Credit facilities are also available under the plan.

Under the model, a channel company would pay a joining fee of $2500 (plus GST) for conference attendance and accommodation and other benefits and a monthly subscription fee of $390 (plus GST) to join the group. "What I'm doing is taking the product to IT&T systems integrators. Not the Leading Edge brand, but the Leading Edge services," said Young.

The benefit for any channel player to get on the bandwagon was to apply its purchasing power and "boost their margin," he said.

"I build their bottom line by increasing their sales and reducing their above and below the line cost - and the impact is significant," he said. "They get a better deal - it's a simple as that," he added.

"There's access to products and services infrastructure for IT resellers that a retail business like [Ross] Whitelaw's [Leading Edge Computers] doesn't satisfy because he's in a business that deals with retail," he said.

So far, Leading Edge has had interest from up to 50 resellers -- businesses that turnover between $600,000 and $20 million per annum in sales revenue.

"Vendors are seeing such value in the offer that we've got that they're actually referring it to their resellers," he said.

"If I didn't get a good response I'd be worried. They [resellers] are hurting but none of them know how to market," he said.

"I don't have the stress of making sure I make my rent payment when I sit down and think about my marketing program - but they [some resellers] do," he said.

Young said although margins are tight in the IT channel, he would establish strong relationships with IT suppliers that improve the member's buying power.

"My members could never do it independently. But by aggregating 1, 2, 300 members as we progress, I'm going to have significantly better buying power," he said.

"If we just look at the computers group - it's a significant client of Tech Pacific and we do a lot of business through [them] as we do through Ingram and other distributors.

"I apply the buying power of 1300 stores to their non-trade purchases, from their credit card transactions to their telephony bills. Anything that we can apply economy of scale to - we get a better buy," he said.

The division would also be the central provider of credit for member companies.
"The member pays us, we pay Tech Pac, the debts insurance and it's all secured debt for the distributor," he said, likening the model to Hugh Evans' new Moneytech venture. "They [Moneytech] have actually taken our model because we've been doing it since 1986," he said.

Another big part of the plan is a monthly newsletter which is being written by IT journalist Richard Chirgwin under the direction of Young. The newsletter - which is being distributed to member's customers - aimed to teach users about technology. "We work with the vendor and say 'What are you producing?' The vendor and the distributor have to tell me what they need to shift. Then we have to work with them to develop the content," he said.

There are also non-trade benefits for members, Young said. "The one [benefit] that makes the impact on a business is the credit card transaction rate. The rate for an integrator will be from 1.1 to 1.6 percent - we'll be at 0.7 percent," he said.

"What we deliver to a member who is doing significant transactions on credit card is less fees. If I turn their 1.6 to 0.8, I've just put 0.8 of a percent of their turnover on their bottom line," he said.

Young claimed he needed between 50 and 70 B2B members to make the business viable.