Reseller MSY has hit back at claims by an anonymous rival that distributor Achieva had supplied it with Seagate drives and other parts at prices below cost.
An email, signed by 'A Nearly Ruined IT Seller' and using an email address dubbed 'Industry Insider', at email@example.com, was sent to at least 37 different sales departments in the Australian PC channel on 28 April.
The anonymous letter cast aspersions on the business practices of Achieva and MSY Technology, claiming the duo had done a deal to supply the latter with components below cost.
However, Andrew Shiau, MD at MSY, said he believed that Achieva and other distributors had made MSY the same deals that were made to other resellers in the Australian channel.
'I think the distributor has played a fair game, honestly, they tell everybody. But we were also prepared to take the risk,' he said.
Shiau said the distributors involved had advised resellers to stock up on particular products at a certain time. In the case of hard disk drives, MSY had been advised to stock up earlier this year and that stock-up had coincided with favourable exchange rates, he said.
'When we started to get our stock in February and March, the exchange rate was pretty good. About $0.78, against the US dollar. But now, it is below $0.70 – that's maybe 10 percent difference,' he said. 'We got a lot of stock.'
The 'Industry Insider' email – sighted by CRN -- had claimed to be 'a small IT business owner sick and tired of being squeezed out by underhanded deals, especially the one between Achieva and MSY Technology.'
MSY had been able to sell hard disks at 'well under [its] costs' to retail customers, it said.
'I am not a huge buyer but I do take at least a few boxes a week and would expect my wholesale price to be competitive ... For months now I have been told by the distributors of Seagate ... that they don't know how MSY sells for the price they do and they aren't supplying to them, and so he must be getting them from overseas,' the email said.
'Industry Insider' further claimed that MSY's low prices were ruining his or her own reseller business and 'destroying our very way of life'.
MSY's Shiau said that all his stock was genuine and sourced via legal channels. 'Honestly, we're not doing anything illegal, or for cash prices or something like that,' he said.
All hard disk drive stock was sourced via authorised distributors, such as Achieva. As far as parallel importing was concerned, hard disk drives were not worth the effort due to warranty issues, he added.
Shiau said he ran a low-overhead, shoestring operation which could well give MSY a competitive edge against some more traditional IT resellers. Customers have to come to MSY to pick up their products – saving on delivery costs.
'We try to reduce our overheads. Some are finding it quite hard to do this business, because their overheads are too high,' he said. 'I think, if we can make $3 [per item], we can survive, but other shops might need to make as much as $8 or $10.'
He pointed out that the weekend computer markets sold hardware for as little as $1 profit.
The reseller was first registered mid-2000 and has three branches – two in Melbourne and one in Sydney – with three staff each. Sales were going so well that a branch was expected to open in Brisbane soon, Shiau said.
Shiau said he had seen the email. However, he had no idea who might want to target MSY for such an attack, Shiau said.
Interestingly, the anonymous 'Industry Insider' email appeared to blame both MSY and Achieva, but singled out the latter in what it termed the 'backdoor deal' -- asking other resellers to boycott that distributor.
John Lu, MD at Achieva, said it was possible to sell hard disk drives very cheaply at the moment due to good exchange rates. Such prices were temporary and prices were expected to rise again soon, he added.
Seagate and Western Digital hard drives had both experienced very good pricing in recent months, Lu said.
'At this moment, because we paid at still a high exchange rate, compared to the current exchange rate, we still gained around six percent,' he said.
Lu said he had heard the rumours about MSY and Achieva. However, the relationship was completely above board, he said.
'They are one of our resellers,' Lu said. 'They have very aggressive pricing in the market.'
MSY Technology had bought some 400 or 500 drives from Achieva in the last full financial quarter, he said.
'They've only got a couple of people and I think they're very low-cost,' Lu said.