Hans Koppen, Ingram Micro’s European president, has argued that “something has to give” if distributors are to continue making money from commodity IT products.
Koppen told CRN that distributors may be forced to change the way they sell items such as PCs, laptops and printers if prices fall any further and vendors continue to squeeze margins.
“My conclusion is that some of the traditional business where we buy from the vendor and sell it on will be replaced with a fulfilment model where we charge a fee for our services,” he said.
“If distributors have to buy from a vendor on three per cent margin, it’s not an equation that works anymore. Prices have come down so much we’re starting to run out of room to manoeuvre.”
Ingram’s European operations “stabilised” in the first quarter, Koppen claimed, as turnover from the region increased by 3.6 per cent year-on-year in local currencies to $3.05bn.
European operating margins dropped from 1.28 per cent last year to 1.15 per cent as operating profit hit $35m.
Koppen insisted Ingram will have clawed back the market share it lost in Germany, following a warehouse management system upgrade in September, by the end of Q2. He added that the distributor had gained ground in Spain as rival Esprinet struggled with its integration of recent acquisition UMD.
Alastair Edwards, senior analyst at analyst firm Canalys, said the system upgrade in Germany will have “tested the loyalty” of local resellers, but that Ingram was doing well in most European countries.
“Ingram Micro is leading the way because it is prepared to invest in new opportunities,” Edwards said. “It now needs to invest more in enterprise mobility and unified communications and to move into emerging markets such as eastern Europe.”
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