Hp Caught 'Undercutting' The Channel With Direct Sales On Hp.com

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Date: Thursday September 12, 2019 11:56:22 am | Views: 1355
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    Partners Attack Hp For 'Undercutting' The Channel,
    With Direct Sales On Hp.com
    'I now buy from other vendors when I can' – partners attack HP for 'undercutting' the channel. Fears emerge the vendor is 'silently' ramping up its direct model with aggressive pricing
    By Josh Budd
    Image result for hp backdooring channels
    HP partners are "disgusted" by apparent moves from the vendor to use its online store to undercut the channel.
    HP's online store has historically been associated with its consumer business, but partners claim the vendor is now selling business products at a much cheaper rate than what's available to partners through distributors.
    This includes the boss of a small reseller, who claimed in the anonymous comment box that they have been involved in an "ongoing battle" with HP over its undercutting practices.
    "I now choose to buy other manufacturers whenever I can as I think it is disgusting that this is allowed to continue and yet they keep promising that they are sorting it out. What an absolute crock!" they said.
    Some have speculated that HP, which pushes 87 per cent of its global revenues through the channel, is moving towards a business model that resembles Dell's – a vendor notorious for its aggressive direct sales arm that regularly comes into conflict with its channel partners.
    "It is a conflict of interest between HP's direct business and the channel. I know that's what Dell have done and that's why I don't like selling Dell laptops, because they've got a super-aggressive direct channel. And I'm wondering if HP Inc are silently going down the same route in order to win more business," said Jethwa.
    "[It's] very similar to another vendor [Dell] who we only deal with perhaps once in 100 times when we have to, in that they are very quick to jump into direct selling when they want and then pass the buck back to dealers for day-to-day support," another partner said.
    Jethwa said the vendor has suggested that partners steer customers towards raising bids for the products they need, but he said HP is only offering a three per cent discount on what's available through its store.
    "Three per cent is just silly. For the process of raising a bid, it's not even worth selling HP. It's unrealistic," he said.
    "A lot of customers don't operate on a bid basis; they don't want to order 100 laptops if they're a small or medium-sized business. They just want to order as and when they need it."
    But one senior executive, Kieran O'Connor from Platinum-level HP partner Total Computers, holds a different view, telling CPI that he hasn't experienced any conflict with HP's online store.
    "We've not experienced that. To be fair, we had it a while back where a customer found something on HP's store that was slightly cheaper, but we contacted HP and there was a positive outcome from that. They decided to cut us in and we made margin from that deal.
    "From what I see, I don't think it's their intention [to undercut the channel] – I certainly don't get that impression. For the one incident that came to mind, they were very responsive and put it right for us."
    HP responded to our request for comment with the following statement:
    "Similar to other leading e-commerce sites, HP Store pricing automatically and continuously adjusts based on a variety of factors and market forces. This is common practice across the industry and something that partners will inevitably encounter from time to time.
    "While this only affects one to two per cent of our total channel sell-through per quarter, we are deeply committed to always doing right by our partners. We have already implemented a process that allows partners to be fully compensated for any pricing differences. In addition to making up the difference, we provide additional partner compensation in instances where this occurs. Nearly 90 per cent of our business goes through the channel and we are deeply committed to our partners' success."
    Rowan Jethwa, senior account manager at Gold-level HP partner Autodata Products, told CRN's sister publication Channel Partner Insight that some of his customers have begun questioning his quotes after finding products, including laptops, PCs and accessories, for up to £200 cheaper on HP's online store.
    "I've noticed this only recently, where customers have been coming back to me and saying ‘is your pricing right? Because I can get this from the HP store for cheaper'," Jethwa said.
    "What tends to happen is: you'll quote customers, they will then do a bit of shopping around to make sure the pricing is right. They'll put the part code into Google and find that the HP Store is one of the first search results. That comes up and the pricing is sometimes in the region of £100 to £200 less than what we buy at."
    Jethwa said he's noticed a change in the last few months where customers have started pushing back on quotes for HP products provided by the VAR.
    "It puts a strain on our customer relationship, because our customers think we're extorting them when our quotes are £200 more expensive than what they can find on the HP store," he said.
    The Autodata account manager said he has escalated the issue multiple times with HP, only to be told that they're aware of the situation, but are unable to provide any further information as to why the HP store's prices are significantly lower.
    The HP Store was also a recurring source of grievance for respondents in the soon-to-be-published 2019 CRN Vendor Report, with many partners who rated HP flagging it up as a concern.
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