HP warns channel of threat from internet

Internet E-commerce could prove dangerous to resellers.

Hewlett Packard has proclaimed that the internet and e-commerce will cause a meltdown in the channel once it achieves mass acceptance, causing the removal of resellers from the supply chain, as they face increasing competition from internet rivals.

The drive for an efficient supply chain could lead to a company selling everything exclusively on the internet, cutting out its traditional channel.

Bruno Castejon, HP European enterprise programmes marketing manager, described the event of a vendor collapsing its supply channel as 'the nightmare scenario' for the channel.

Isabelle Roux-Buisson, marketing centre manager of HP's enterprise systems group, said resellers which shifted boxes faced an uncertain future. 'Tomorrow's companies are looking at their competitive advantage today. (The internet) will revolutionise the way we do business. It will force a company to know what it is good at, what it stands for and how to provide value.'

However, this is only the first step as retailers, resellers and vendors find the internet tools to redefine the management of their supply chains.

According to Castejon: 'It's easy and cheap to start up a business on the internet and there's an instant global market. They will compete not as company versus company but supply chain versus supply chain.'

In the US, the effect of the internet on business has been flagged by Egghead.com moving its operation from the high street to the internet.

George O'Connor, analyst at IDC, commented: 'It is all about collapsing the supply chain, it offers the possibility of a new world. A retailer using the internet can offer all products and services.'

He said a firm such as Tesco could sell everything on the internet. 'Retailers will able to offer computers, food, cars, insurance, mortgages. They can sell anything.'