*NEWS*EU & UK:PRICE WARS WITH THE OEM’S

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*NEWS*EU & UK:PRICE WARS WITH THE OEM’S

 user 2005-09-29 at 11:21:00 am Views: 74
  • #13111

    Price wars with the oem’s

    Price wars are pushing
    retailers to move toward cheaper imports. Lee believes that the
    onslaught of Chinese and Asian imports has considerably reduced the
    quality of products to the end-user. “The Asian product isn’t of the
    quality of the UK and the European manufacturer. The market has been
    created because of the price. It’s like any industry. Because prices
    have been driven down, the corporate needs to supply at such a low cost
    to do those large contracts, so everybody now has to buy Asian
    products. So it’s not good for UK and European manufacturers.” He fears
    that the current climate is to linger and that “trade is losing its
    quality desperately.”
    The other major change that has happened over the past ten years is the
    rapid growth FOR THE OEM’S, particularly toner cartridges.
    THE OEM’S now represents 35 per cent of the average customer spend. The
    problem with this, says Lee, is that THE OEM ARE highly competitive,
    low margin product market and because it represents so much of the
    average customer spend, traditional stationery products are in
    reasonable decline.
    He explained “THE OEM manufacturers like Hewlett-Packard and Canon all
    want to keep this market which they never bothered with before. They
    keep making their products more and more difficult to copy so that they
    can control the market. OEM manufacturers control the market and they
    make all the money.” Lee blames the dominance of the OEM manufacturers
    for keeping resellers margins so thin.
    Going forward, Lee hopes United will become something unique in the
    marketplace. “We’re trying to be a bit more than a dealer group. We’re
    trying to create a frontline company.” He wants members to trade under
    the United banner as a single entity, much like UK removals group
    Britannia, to give them “the opportunity to fight against the
    corporates. The public is more likely to go to a well-known brand
    because it thinks that it’s going to get a better deal, and it probably
    will.”
    Lee doesn’t believe that Challenge has put a dent in United’s strategy
    in any way, shape or form. “We’ve got a two-tier strategy. We are
    committed to dealers trading directly to the end-user as United. That
    is our number one strategy. And to create high value for their
    individual businesses is a major point of that strategy, as is creating
    a national distribution network from it. The second tier is to make
    sure that the smaller dealer gets better value for money and has a
    marketing edge on his local competitors.”
    He continues: “The main protagonists behind Challenge didn’t want to be
    involved in our strategy and that’s probably the reason why they left.
    There were a couple of dealers that wanted to move on with our strategy
    but they have gone because the others did. But I’m not saying that they
    won’t come back.”
    So what if any of the members that left United to form Challenge want
    to return? Easy, says Lee: “The door is always open – for some of them.