THE Mumbai-based distributor Tech Pacific India grew by 48% in 2000-01, from Rs 1,171 crore to Rs 1,727 crore. Sure, this was less than its growth rate in the previous year, when it grew by 57%, but Tech Pacific’s pace was still faster than that of other IT segments, indicating that its marketshare was increasing.
SWOT
Strength: The largest distributor in the country with over a 7,000 dealer network
Weakness: Uncertainties about the future owner of the company, as the parent company, Haganmeyer, is reported to be keen to sell off the Indian venture. Strategies could change depending on the new owner
Opportunity: With increasing unit numbers using the channel network, servicing even the remotest areas has become possible. This offers a tremendous growth opportunity
Threat: Ever increasing competition from Ingram Micro and Redington
PERFORMANCE
HIGHLIGHTS
Grew by 47% to Rs 1,727 crore
Two distinct business models—value-based and volume-based
Tech Pacific worked on a distinct business model, not very product-specific. There was the e-commerce value division that provided technology and software support to resellers and mid-sized system integrators. This helped them, in turn, provide value-added services to their customers. Part of this initiative was a fulfillment or ‘third-party logistics’ service, which offered warehousing and distribution logistics, credit and collection management, warranty implementation and reseller interface management. A volume division looked at mass market products from vendors like Cisco and HP.
As part of its e-commerce initiative, Tech Pacific has already connected 1,000 of its 7,000 dealers to regional hubs through VSATs, with product and sales information updated every 15 minutes. Already, business through the site is booming. It is a measure of the TechPac drawing power that when any new MNC entrant coins its strategy, it turns to managing director Shailendra Gupta to create the market. The latest to associate with the distribution giant was Palm, for its personal digital assistants. Tech Pacific already distributes a spectrum of products from all top vendors—Microsoft, IBM, Acer, Sun and HP.
With ever-thinning margins in the IT distribution business, Tech Pacific hopes to make the most of its strengths to retain margins. It plans to keep its customers—vendors, resellers and dealers—happy by offering value-adds.
Doorstep delivery of products has seen the normal delivery cycle of eight hours being cut to a mere two hours. Then there are customized credit offerings, a one-size-fits-all facility. An expanded branch network ensures a wider geographic coverage for its vendors. Then, there is the refurbished Inner-Circle program, which will see the top 100 resellers enjoying special privileges in terms of commercial benefits and treatment. To top it all, TechPac is utilizing its own resources better, leading to higher productivity.
But Tach Pacific’s very strengths—strong vendor relationship and the doorstep delivery model, which cuts into profits, may turn out to be a threat.
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THE Mumbai-based distributor Tech Pacific India grew by 48% in 2000-01, from Rs 1,171 crore to Rs 1,727 crore. Sure, this was less than its growth rate in the previous year, when it grew by 57%, but Tech Pacific’s pace was still faster than that of other IT segments, indicating that its marketshare was increasing.
