Confed-ITA mulls trade terms

Chennai: For a long time now, the channel community down South has been raising its voice against the practice of direct sales. This time however, the issue has finally boiled over with Confed-ITA taking the initiative to sort out discrepancies with vendors.

“We are working on a Common Minimum Trade Terms (CMTT) plan to sort out major pending issues with the vendors here. The CMTT will have legal implications regarding sorting out territory control, direct pricing issues and warranty terms,” informed PN Prasad, President, Confed-ITA.

Discussing the matter of vendors' policies related to direct sales despite having a channel presence, Prasad elaborated, “The vendors have a direct sales team everywhere and they are also conducting business through the channels. Also, the vendors are offering lower prices and better terms of trade resulting in buyers wanting to buy directly from the vendors. Thus, on this front, we are losing customers.”

Recently, the direct sales team of HCL bagged a deal in MKM College in Dharmapuri resulting in much discontent in the channel space.

Speaking about the issue, Salem-based S Prakash of Vashini Systems and Solutions said, “The dealers here are losing face in front of customers because the price quotation given to the channel is higher than the end-user price offered by the vendor.”

Prakash had brought the issue of direct supply in MKM College with Confed. However, the association has not taken up the issue with the vendor as it feels that these kinds of issues are common in South.

“For the last five years, this issue has been boiling. It is not desirable to take up the issue with HCL at this level. Every major vendor, including HP and Acer, are resorting to direct sales despite their channel presence. All we can say to the dealers is to stop doing business with the vendors engaging in direct sales,” said Prasad.

“In Tamil Nadu, educational institutions comprise a major market segment and none of the colleges respect any dealers here or conduct any business as they have access to cheaper prices and better terms of trade from the vendors,” he elucidated.

On the other hand, in the channel space itself, some dealers felt that it is better for the channels to have a direct vendor sales team. Justifying the issue, Vellore-based Pravin of Vasavi Computers who is also an HCL partner said, “I do not have any problems with HCL whatsoever. As a channel partner, I clearly know my limitations and the business model. Mostly, the vendors take a bulk order supply which cannot be handled by the dealer. I feel, that it is best that the vendor itself handles bulk shipments and supplies.”

Clarifying the issue, Prashant Prakash, Country Head-Sales, Desktop and Laptop Division, HCL said, “We have a lot of direct sales accounts across the nation maintaining our channel relationship. When the company indulges in direct supply, it is primarily a personalized bulk order. I do not agree to the discontent in the channel space in the South stating loss of revenue as a result of direct sales as we have a clear demarcation in our sales strategy. There is the end-user channel space as well as enterprise channel base, so there is no overlapping of supply orders in the country.”

Drawing a clear line between its sales policy and channel strategy, Prakash said that July onwards, HCL would be strengthening its channel base.

“The company is planning to strengthen its channel base across the nation. With pan-India focus, we will be working to reinforce Platinum, Diamond, Gold and Falcon partners. Also, we will work towards enhancing the Digilite store chain. In this realm, we will be building up a strong and aggressive sales team to be launched on July 1,” he concluded.