Cooey Mr Shifty

The word box-shifter gets a bad rap. Guy Clapperton looks at the logistics of box-shifting and explains why the reputation is undeserved.

There are a number of received wisdoms in the IT trade and, as is thestics of box-shifting and explains why the reputation is undeserved. case with most received wisdoms, no one challenges them much any more. That, after all, is what the word 'received' means, as you will no doubt realise, being educated Vars, resellers and dealers - anything but box-shifters.

And you won't ever be box-shifters, will you? Because one of the many received wisdoms we all suffer (sorry, I mean enjoy) in this fabulous world of IT trading is that nobody - not no way, not no-how - ever makes a living out of being a box-shifter.

You've got to get niche, get big or get out, as a couple of hundred interviewees have been known to say. But above all, a key competitive advantage for a switched-on channel player is the value-add element of the business, as marketing people will happily tell you. Funny how only marketing people ever talk that way, and everyone else has to pretend to understand what they're on about.

Even so, there's a nagging feeling that this value-add thing has been overblown. People were selling on the added value schtick long before there was any consensus about what added value actually was (see box, page 43). Magazines and Var promotions cropped up without any real reference, opposing whatever other promotions were present. Before you knew it, everyone was a Var.

SHIFT IT, MATE

Now let's be clear about this. There are some instances in which a straightforward box-shift sale just isn't appropriate. Take telecoms dealership Maintel, for example. Jonathan Harrison, the company chief, often has to integrate his equipment with PCs. It would be wholly inappropriate for Harrison to send his customers, many of which are in the brewing industry, the box and a few cables and then wish them luck. But even he agrees that the idea of adding value is over-used. 'PC vendors,' he says, 'don't actually do anything to add value to their goods as far as I can see.'

No doubt the likes of IBM and Compaq would either dispute this, or point out that a computer only has any value because somebody has manufactured the thing. And the brand, when you're talking about the big guns, tends to add value for a reseller trying to make a sale.

A ROSE BY ANY OTHER NAME ...

Some people don't object to the box-shifting tag, as long as you acknowledge that they do other things as well. Paul Cook, sales director at Frontline, confirms that if a dealer wants to take the box and naff all else, that's fine - that is if they don't mind it going through quality control first.

'The thing is, you have to decide whether you want to be known as a box-shifter or a value-added distributor,' Cook says. 'After that, you get the costings right.'

According to Cook, a well-oiled box-shifting operation isn't a cushy option by any means. 'A successful box-shifter has to be an excellent logistics manager. He or she also has to be a warehouse and a bank, and must get goods out with minimum fuss and effort.' They also have to build a relationship with their customers because they cannot afford to lose them.

It can be more difficult for the smaller trader, the high street retailer or the off-the-page merchant to gain any credit for adding anything worthwhile to a sale. How many times have you bought a TV from a major retailer only to start sighing and looking wistfully at the exit when the Saturday worker tried to flog the extended warranty as well? You know perfectly well that if it's going to die on you, it'll do so within the first month, not after five years of solid service. All you want to do is take the box away or have it delivered, and then forget it.

GETTING PUSHY

Retailers and mail-order merchants appear, at first glance, to be specialist box-shifters, although they don't all see themselves in that light. Malcolm Jamieson, managing director of Crown Computers, agrees that logistics are vital in his end of the business but points out that the cost of setting up a pure box-shifting operation, including telephone system and warehousing, is prohibitive if a company doesn't invest in after-care as well.

'You can't rely on new customers all the time. Repeat business is increasingly important,' he stresses. 'So you've got to keep your customers assured that if their PC fails, you will fix it.' Jamieson points out that if every customer is new, the return on investment for marketing a system is low.

Distribution should be the ultimate in box-shifting. One distributor, who asked to remain anonymous, used the selling point that the box would arrive unopened at the dealer's door.

As long as the kit arrives on time and undamaged, this is actually quite a helpful service in its own right, and why so many channel commentators don't see it that way is a mystery. Harrison believes distributors are unlikely to be able to offer any extras that a competent dealer is likely to want.

Cook disagrees, which won't raise too many eyebrows. He says that having your cost model right is going to make all the difference. But there are areas in which a distributor can add something worthwhile. 'We have the ability to box-shift at the one extreme and add value at the other,' he says.

'We do things like networking, and there's also the stuff we do with Datrontech, our division that supplies client/ server systems. But the business model is entirely different from box-shifting.' You almost get the feeling that Cook actually likes referring to himself as a box-shifter.

Networking is a bit of an oddity in the box-shifting arena. It seems to require a lot of input on the seller's part, but it isn't that many years since loads of vendors were setting out stalls selling what they described as a network in a box.

It is happening, to some extent, in the retail market. You can go into one of the warehouse organisations and look at a home computing style hub - in America, people are even buying them. But the ultimate problem in networking is the cabling, and this is difficult to box-shift.

Richard Bell, sales and marketing director of cabling specialist Cableship, has had problems with customers who believe they can install their own cable systems.

'In a lot of cases,' says Bell, 'people ask you to deliver only the cables, but it turns out later that they don't really know what they need.'

This is particularly true when the company is talking to the small to medium-enterprise market, he says. 'They don't have huge buildings and they think they can handle it themselves, but they just don't know how to optimise the system throughput in the way we do.' According to Bell: 'It's not a matter of if a network crashes, it's a matter of when it crashes, and that's when you are going to need a specialist.'

Harrison finds the SME market less appropriate than imagined for a straightforward equipment sale. 'It's better if we put phone systems in and look after them, including the configuration service,' he says. 'Even in the corporate market, we're talking to people who want to run their business, not run a phone system.'

It may be deeply shocking for computer traders, but in spite of what everyone says, there certainly are box-shifting dealers that actually do rather well for themselves.

For every value-added distributor which insists that buying from them is the only means of ensuring your flange socket is truly Java-enabled, there is another whose value is established by ensuring the computer is where people want it, when they want it. In some cases this means that the box arrives unopened, and there is precious little wrong with that.

For some strange reason, though, it is difficult to find people who will openly agree. Even Cook didn't seem able to use the word without coming close to apologising for doing so. But there's a reason for that: it seems nobody wants to go on record and admit that they are a box-shifter.

I CAN DO ANYTHING BETTER THAN YOU CAN

Talk to anyone in the trade and you will find that the poor darlings have worked out some tortuous means by which they truly believe their sale is a better and more legitimate means of selling than anyone else's.

This is probably because they add significant amounts of value to a box.

Even the retailers and mail-order merchants do it by throwing in a free printer or some free software, or even extending warranties.

The reason for this appears to be, peculiarly enough, that some sort of moral dimension has crept into the computer business ethic. Stacking them high and selling them cheap is perceived as cheapening the business itself. And as for drawing a profit from it - ooh no, can't have that mate, you're not doing anything. That is, apart from saving the punter the task of going to a manufacturer, negotiating their purchase price for a one-off, then going to a printer manufacturer, a modem manufacturer, assembling it and then getting it all home.

These services are useful as long as the business model is right and, according to Cook, as long as the business concerned has segmented its market correctly - although Bell's experience seems to suggest that customers don't necessarily segment themselves into the right areas when left to their own devices.

Getting a profit out of such a basic business is, of course, no easy matter, and companies accustomed to selling white or brown goods are already set up to deal with it. The market is already saturated as far as the corporate reseller that wants only to sell to those organisations which organise their own support.

TELL IT LIKE IT IS

Nevertheless, it is baffling that people who run these sorts of businesses back off from calling it what it is, and it can be confusing for the customer when people claim they add more than they actually do. 'There's always someone who wants to make the process seem more complicated and almost mystical than it is in order to justify a higher margin,' says Cook - a familiar enough story.

But there are also box-shifters that sell for low prices and therefore aren't puffing themselves up to justify margins. This can only be the result of some curious snobbery or over-inflated ego, and that isn't at all helpful.

Perhaps it's time to think up a new name for this sort of business since box-shifter has evolved to mean nothing but a 'bad dealer'.

Mastering the logistics of getting a system to a buyer is not an easy thing to do, and it certainly isn't cheap either. In many ways, it is a great pity that so much of the industry has been down on the idea for so long.

IT'S A VAR, VAR BETTER THING

So come on, then. What does the trade actually mean by adding value?

Technically, everything is adding value.

Your customer wants to buy a computer and you agree to deliver it to them - free delivery adds value to the sale. Your buyer wants some shrinkwrapped software added to it - nothing flash, maybe Office 97 - so you get the disks out and go through the automatic installation program. This adds value to what would otherwise have been a bare box.

You offer a warranty of your own in addition to that of the manufacturer.

Once more, this is added value, although it is arguable that agreeing to fix the bloody thing if it doesn't work isn't so much adding value as ensuring that the machine retains its initial value as a tool for doing work.

Once upon a time, a rival publishing house set up a magazine dedicated to the Var channel. The editor, now one of PC Dealer's freelance correspondents, decided she had to have some sort of rule of thumb to work by. So she decided that only people who wrote and added software to a system could be considered true Vars. Anyone who added value by fixing things that went wrong, delivering goods efficiently and chucking in a free bit of pre-written software was, in fact, just a competent dealer and not someone who truly added value at all.

It caught on, too, but it has been frowned upon in certain industry quarters on the grounds that it actually meant something.