Is the Offline Laptop Business Really Doing Badly?

We have had several resellers of laptops and also of other hardware products complaining that their laptop business is going down. There are several reasons cited for this -

1 - A major one is that most of the laptop business has shifted online, thus leaving the offline resellers high and dry.

2 - Another reason cited is that the laptop manufacturing companies are trying to reach the end customers directly, bypassing the channels.

3 - A third reason has to do with the lockdown and problems with the products arriving from China. But this is a temporary reason, as compared to the above two, which are the natural consequences of technological advancements.

"30% of laptop business has shifted online, leaving 70% offline."

--Alok Gupta, MD, Unistal 

Is the offline laptop business really that bad today? We explored this question from different sections involved in this business.

Partners Speak

The partners have chosen to stay anonymous while voicing their opinions.

The distributors give targets to the resellers and offload their stocks, giving the assurance to resellers of passing leads which happens few and far between. Till then, the offloaded stocks become end of life and are sold at special pricing, for which the distributor promises that it will be adjusted later, which never happens.

This is a vicious cycle which never breaks and the reseller is always at the mercy of the distributors and the OEMs.

We have Instances of Special Treatment to the Likes of Cloud Tail other than having Specific Models only available on these E Commerce Platforms.

There have been cases of differential pricing and availability Issues for Brick & Mortar.

Return Policy is not aligned to the OEMs' expectations, thereby creating rifts.

Software counterfeits have been reported other than duplicate & counterfeit printer supplies.

This is an age old eternal problem for brick and mortar. When you question the OEMs about this, we become the problematic group and they start looking out for new partners.

How are the partners unable to sell their stocks?

"By and large, whenever any material gets stuck, the OEMs will compensate to the distributor for any losses which they incur. If the stock is for 30 days or less, they will formally give you a credit note, which is called price protection. If it is more than that, they'll give a sell out rebate. And that is the objective in not to kill any distributor.

All distributors are doing well. The model per se is working.

But there are exceptional cases. There are unscrupulous people in the market, who resign or quit. In that case you'll get stuck."

What about the hardware vendors reaching the end customers directly, bypassing the channels?

"We need to look at the percentage. If 70% of the hardware business is offline and 30% is online, then it is a good business for those who fall in the 70% category. Those who are in the 30% are the ones who are complaining. And our 90% of the business is through the channels. I can tell you that we and other distributors like us are doing very well. There are orders worth approximately Rs 100 Crores which are still not fulfilled. So, we have to look at the overall situation. And the overall picture of hardware business is doing very well. Every reseller will not say that they are losing. There are many resellers who are saying that this is the best time for their business."

--Sanjiv Krishen, CMD, Iris Global