Cheap stock raises fears

Logitech and Symantec have warned resellers to be cautious when second-hand dealers approach them touting cheap ex-Dataflow products.

There is debate in the channel whether the vendors will honour warranty or service support on these products, leaving resellers at substantial risk when making a sale.

When IT distributor Dataflow appointed Arthur Andersen as administrator in August, it offered its stock for private sale, a move which, according to Steve Lagos of Australian Computer Recyclers, "failed miserably". The products then went to auction under Hymans Asset Management Group, but most of the stock did not reach the reserve price, and only 9 to 10 per cent sold. Australian Computer Recyclers then negotiated a private sale for the rest of the stock and is offering these products to resellers at heavily discounted prices. Among the stock are at least 3000 Logitech and more than 11,000 Symantec products.

Before any of these negotiations took place, Arthur Andersen had approached Dataflow's suppliers, asking whether they were interested in buying back their own stock. Symantec general manager John Donovan refused.

"It is an unfortunate situation, what happened with Dataflow," he said. "We were one of their creditors and lost a considerable amount of money. The administrators offered to sell our products back to us, but we refused; we'd already lost money, so we weren't going to buy back our own stock."

The administrators had promised Donovan that the stock would be sold under certain conditions, including the products having warning stickers that let resellers know they were not covered by a manufacturer's warranty. According to a spokesperson for Hyman Asset Management Group, Australian Computer Recyclers was made aware of the warranty issue.

"The goods were clearly sold by Hymans without warranty," said the source. "As agreed, all packaging [had stickers saying] 'No warranty available on this product'. We had banners erected at the Warehouse and Auction Sales stating that all goods were sold without warranty. All promotional material contained the same warning. I do not believe that you could expect that Arthur Andersen or Hymans could have communicated this message more clearly or forthrightly."

However, according to Lagos and Australian Computer Recyclers, the warranties should stand.

"The manufacturer's warranty is a contentious point that we're fighting at the moment," Lagos officials said. "Logitech is trying to squirm out of it. In this country, if you buy a product, regardless of how you bought it, consumer affairs would insist on a warranty. Every buyer has a right to a warranty, as long as it is sold legally in this country."

Both Logitech and Symantec have told ARN that they want resellers to be made aware that the companies consider any product sold through such an arrangement as invalid for a manufacturer's warranty.

"My main concern is that they are trying to flog off these products without a warranty," said Marco Manera, Logitech general manager.

"We won't be providing any money-back guarantees and there will be no support provided for these products," Symantec's Donovan said. "If resellers purchase it, they are responsible for it."

The two vendors now stock upgraded versions and advise resellers to buy their products only through approved distributors.

"We're talking 90 to 100 per cent of [the old Dataflow] products being obsolete; they are no longer a part of our price list," Logitech's Manera said. "I think they'll have a tough time trying to sell such old stock anyway."

Logitech now only has three distributors in Australia: BJE and Tech Pacific for retail, and Ingram Micro for OEM distribution.

Symantec's Donovan agreed with Manera. "I'd recommend against buying this stock; the bulk of it is obsolete," he said. "We have offered new versions of these products since Dataflow went down. All other Symantec products sold through Express Data and Tech Pacific is guaranteed for full service and a full warranty. But none of these offers are available for the ex-Dataflow stock."

Lagos says he will continue to sell the stock, expects warranties to be honoured, and will offer his own 30-day warranty on faulty or damaged products.

"They can jump up and down as long as they like - it's the end user they will [antagonise], not us," he said.

Manera is adamant that resellers are leaving themselves in danger if they ignore the warning and buy the cheap stock.

"This is an unfortunate situation when it comes to protecting the channel, and we have no control over it," Manera said. "My message to resellers is: beware of purchasing from this distributor, especially if the products are at a strange price."

Donovan has similar sentiments.

"I'm disappointed that this has happened," he said. "We were guaranteed by the administrators that it wouldn't. In short, my message to resellers is: run a mile."

The ultimate decision on warranties may end up being decided in court. Brian Given, assistant director general of the Department of Fair Trading, said that in the case of a faulty product, both Australian Computer Recyclers and the two vendors would have an obligation to put things right.

However, when it comes to any extended warranty or service support, the manufacturers and importers of goods are only accountable when the product is sold through their channel.

"They can't get away from their responsibility over goods that aren't fit for the purpose for which they were sold," Given said, "but they are not required to provide any additional warranty or support. That's going beyond what the basic law requires."

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More about AndersenAndersenArthur AndersenAustralian Computer RecyclersDataflowDepartment of Fair TradingExpress DataHymansIngram MicroLogitechSymantecTech Pacific

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