Action, Not Lip Service
Coffield is one of many system builders weary of being unable to compete with e-tailer pricing comparisons made via PriceGrabber.com with the likes of Newegg.com and Zipzoomfly.com. The sheer economics pressing against companies such as Cheap Guys Computers and all other independent system builders is mind-boggling. Take the Intel Core 2 Duo E6300 Conroe 1.86GHz processor. It sells on Newegg.com for $180 with free three-day shipping. That includes no state taxes. And Newegg.com offers a no-payment- for-six-months-or-more option with your Newegg.com preferred account. The way Coffield sees it, given his best price of $190 minus his marketing funds as an Intel Premier provider, the Newegg.com pricing is $5 below his cost. And AMD is no better, Coffield said. An AMD Athlon 64 3200 + Venice 2.0GHz 512-Kbyte Level 2 Cache Socket 939 processor is priced on Newegg.com at $72.99. Once again, given free shipping, no taxes and credit-card charges, Coffield simply cannot compete with that pricing.
"It's unbelievable," he said. Given the bone-crushing economics facing partners like Coffield, the question is why are e-tailers like Newegg.com getting huge pricing advantages on processors and other computer gear? "How do they expect me to stay in business?" Coffield asks of vendors such as Intel and AMD. "If the answer is we need to focus on services, what they are telling me is to get out of the hardware business. They are saying you are not going to make money on hardware. Basically, they are saying I'm stupid to try to make a living at this."
Vendors have some real soul-searching to do regarding whether they want thousands of local independent system builders or a handful of e-tailers. It all comes down to how much service and support their customers deserve and how much vendors value system builders and independent partners. Vendors: System builders and partners await your answer.
What do you think of e-tailers like Newegg.com and Zipzoomfly.com? Let me know at (781) 839-1221 or via e-mail at [email protected].