Direct vendors outsell channel

Direct vendors sold more PCs in the US than the traditional channel during the third quarter of 1999, according to researcher IDC.

Direct vendors sold more PCs in the US than the traditional channel during the third quarter of 1999, according to a survey by researcher IDC.

For the first time, direct vendors outsold value-added resellers (Vars) in the PC market, accounting for 31.5 per cent share of PCs sold during the third quarter, compared with the channel's 30 per cent.

The survey took into account sales over the Internet, but only five per cent of PCs in the US were sold online. The retail sector accounted for 33 per cent.

"While these results are good news for the traditionally direct vendors, they are bad news for manufacturers sticking to indirect-only distribution strategies," said Joseph Rigoli, consumer and PC channels analyst at IDC.

The figures do not surprise Philip Doye, managing director of reseller Kelway Computer Supplies. He said the channel had accepted that the Internet is "changing everything" and that vendors will use it as a method of selling direct.

"Vendors such as Compaq have to operate direct to compete with rivals like Dell. Going online proves they are competitive but the channel will have to become involved at the fulfilment stage," said Doye.

Clive Longbottom, an analyst at researcher Strategy Partners, said a hybrid model might be the solution. "To the PC vendors, the direct channel will become more important. They will need a direct presence to show that they are responsive to customers," he said.

The IDC study also found that during the first nine months of 1999, the traditional channel led with 31.8 per cent share of all PCs sold, but the direct channel was not far behind with 31.5 per cent.

"To be successful, the PC manufacturers will need to use a combination of direct and indirect selling models," said Rigoli. "They will have to balance the resellers' personal touch in the user segment with the logistical efficiency of direct selling and customisation. But above all, PC vendors need to give customers a choice."

Meanwhile, Dell has admitted that it has been suffering problems with customer service levels in the UK and Ireland.

Following complaints of long lead times and lost orders, Dell UK marketing director Martin Lambert admitted that there are problems with certain processes and procedures, but said the manufacturer is working hard to solve the difficulties.