Xerox to axe majority of its European distributors

Printer vendor Xerox has unveiled plans to drop 46 of its European distributors as part of a new distribution model for its Office Group.

Xerox Office Group’s two-tier distribution model consists of 49 country-based tier-one distributors serving about 8,000 resellers. But this will be restructured to comprise three regional master distributors: Tech Data, Ingram Micro and Scribona.

Under a scheme known as the Smarter Distribution network, Tech Data and Ingram Micro will cover the bulk of western Europe, while Scribona will provide distribution in Scandanavia.

In the UK, Xerox will retain Micro Peripherals as a hardware distributor to work with Ingram Micro and Computer 2000 (part of Tech Data). The transition from Xerox’s current distributors to a new model will take place throughout 2006.

Richard Gibbs, European distribution operations director at Xerox Office Group, said: “The new model will improve overall consistency of products and service levels, and extend Xerox’s reach in the market. The new model is flexible and strong enough to enable us to hold onto smaller, local distributors.”

Gibbs added that the new model will benefit UK VARs as availability of products should improve. “VARs will have more points to purchase from because of the addition of Ingram, and the new model will enable us to better manage our distribution,” he said.

Clive Longbottom, service director at analyst firm Quocirca, said the move is more about cost-cutting than anything else.

“There was a time when a colour laser printer cost between £2,000 and £3,000. Now, if you look at a base level Hewlett-Packard [colour printer], it is going for between £250 and £300, and a Konica model is about £250.

“Xerox used to be able to offer five margin points, but its distributors are now looking at making £15 a box if they are lucky. Xerox has realised it has to trim its whole approach to the market. At the moment it is costing more for it to sell than it is getting back out of it. It needs a much sharper channel to cope, to keep inventory out of the channel and to get the product flow just right.

“This move will give Xerox a better focus on the channel, and it is just a reflection of the market. The high-margin, high-price printers are just not there anymore.”

Kevin Jones, managing director of Xerox reseller Printware, said: “I think Xerox has done this more as an internal move to make it easier for it to handle its distribution.”

laura_hailstone@vnu.co.uk