Ingram Micro will start increasing prices in Europe this month to pass on costs of changing vendor terms and conditions in a bid to return to profitability.
The distributor - which posted profit down from $42.3m to $24.7m for its first quarter ended 1 April before a gain of $71. 4m - will increase prices by up to one per cent on most products to stop a decline in vendors' market fund rebates. First quarter turnover rose 16 per cent to $7.8bn.
Greg Spierkel, European president at Ingram, said the increases will be implemented in a "a matter of days and weeks depending on vendor lines", but insisted the increases will not be major. "In the total scheme of things, this is insignificant. It might even be imperceptible to resellers, but for us, it's significant," he said.
Meinie Oldersma, UK managing director at Ingram, said the hike is part of a constant pricing review and extends a printer price increase implemented six months ago. He said Ingram can no longer afford to sell at, or below, cost and wanted to take a leading position to ensure that common sense pricing prevailed in the channel.
Oldersma said vendors were supportive of the increases because they accepted that the channel was important. "There is a realisation that it needs to be done," he said.
But Jazz Garcha, director at G Squared Computer Systems, said it had already moved a lot of its business because of Ingram's increases. He said Ingram should try to negotiate more favourable terms with vendors rather than pass on the costs to resellers.
Spierkel said the increases had not been driven by weak European sales. He said Europe had grown faster than the market last quarter, with the UK recording the second highest growth. He said the UK operation has completely reversed its slide and is gaining market share as a result of better execution and management.
Bob Bhatti, director at Computer Care South, said: "It bothers us because most resellers look at price. Margins are very tight as it is. So we will look at other distributors."
First published in Computer Reseller News
Infrastructure provider says international sales now make up 51 per cent of its revenue
Suzanne Chappell of TMS plans sailing venture after selling Oxfordshire-based TMS to acquisitive Chess
Withdrawal of credit insurance by some providers a 'reflection' of current challenge facing IT sector, according to MD Steve Soper
SMART's UK managing director joins Lenovo to boost SMB business