Vendor e-biz sites fail to fire in NZ

Service is king in New Zealand.

That's the verdict after single-seller vendor websites here have so far failed to fire despite all the major IT vendors in the US and Australia launching into direct web sales to end users with gusto.

Direct web business so far commands less than 1% of sales in this country, much to the joy of resellers. Instead, resellers, systems integrators and service-orientated companies such as Axon are finding by offering both sales and after-sales service their websites are thriving.

Vendors such as Compaq, which has avoided launching a site here despite Compaq worldwide taking that approach, admits this outcome was expected.

New Zealand is being called an anomaly, even compared to Australia. "The relationship with the channel here is much stronger than anywhere else in the world, " says Compaq's XS business group manager, Andrew Seerden.

Hewlett Packard, meanwhile, has seemingly done an about-turn after launching a direct shop site here last year. It is now pushing an off-line media-driven campaign targeting smaller businesses, supported at the back end with a website that refers buyers to its larger resellers. HP's Simon Molloy says the original plan was to build a resource portal for small and medium-sized business. He says the direct shop site has proved "small and very low key".

IDC analyst Mark Cribbens confirms vendors such as HP reporting direct web sales totalling around 1% of business. Cribbens notes high margins make web sales attractive to vendors but, logistically, the country's diverse geography and population spread makes transportation more difficult, while there are relatively low levels of customers confident about using the web to buy products. Direct buyers are savvy and technology-literate, buying at least for the second time, and are unlike most buyers in that they don't want to ask questions, he says.

In New Zealand, Apple, Microsoft and IBM have decided to employ a hybrid model, with sites that eventually point buyers to resellers. In Australia, where Apple, IBM and HP sell direct, they have suffered from channel fallout and reaped only small sales to date.

Direct model company Dell is doing well here - in IDC's latest 2000 research on PC market share it held third position but, unlike internationally, it is using other businesses as a form of sales channel. In contrast, Gateway failed to fire. Even ASPs such as esolutions and Unisys have employed the channel.

Meanwhile, service-oriented sites are reporting big sales. Axon's Quality Direct site increased Axon's revenues by 40% the first year and is looking to increase revenues by 60% through the site this year, says manager Scott Green. B2B sites such as Tech Pacific, Comworth Systems (importer of Oki) and office supplies company OTC are also doing well. OTC reports 40% of its B2B sales are now done online.

But the future looks less certain. IDC's Cribbens says buying patterns should change as consumers become more savvy - and those vendors with toes in the water now will have an advantage.

Compaq's Seerden was not willing to say the vendor would never go direct online. "In a few years people become more literate; we expect purchasing online to increase."

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