Software House Competition
Now Viewing Software House's competition in: Computer and Office Equipment Distributors (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How is the company retaining its most valuable customers? - Because large customers can buy more cheaply from manufacturers, retention depends on other factors.
What services does the company offer to increase value? - Many distributors offer value-added services such as system integration.
Does the company sell mainly to corporate users, retailers, or value-added resellers? - Some distributors specialize in a particular market channel.
What percentage of sales goes to the largest customers? - Small distributors may get a large portion of their revenue from a few accounts.
Does the company compete with national distributors? - Most companies in the industry are regional or local.
How large is the company’s sales force? - Sales personnel generally account for about a third of all employees.
What marketing tools does the company use? - Advertising, direct mail, telemarketing, and trade shows are commonly used in the industry.
How much of the company's orders are through a website? -
Does the company set prices by simply marking up manufacturer wholesale prices? - Manufacturer prices have steadily fallen in the past decade.
Competitive Landscape
Demand is strongly affected by the level of business activity. The profitability of individual companies depends on merchandising and efficient operations. Large companies have economies of scale in purchasing. Smaller companies can compete effectively by offering specialty products or superior service. The industry is capital-intensive: annual revenue per employee is about $600,000.
Full Industry Overview For Computer and Office Equipment Distributors
Business Challenges
CRITICAL ISSUES
Revenue Tied to Business Activity - Sales of office and computer equipment depend on a growing economy and rising corporate profits. Revenue for computer wholesalers fell by about one-third during the recession of the late 2000s after having increased 20 percent in the previous five years. During economic downturns, businesses and consumers can delay buying new computer and office equipment.
Risk of Declining Inventory Value - The value of computer and office equipment distributor inventories can rapidly decrease. Because of innovation, manufacturers frequently improve products and cut prices. Distributors may have price protection agreements with some suppliers, but try mainly to protect themselves by rapidly moving inventory. The monthly inventory/sales ratio for the industry is low. Despite these protections, distributors face a high risk of inventory write-downs as retail prices fall.
Industries Where Software House Competes
- Computer Services
- Computer Products Distribution & Support(primary)
- Information Technology Services
