On the streets of Dubai

Dubai’s Computer Street is in the heart of the city and features IT resellers of all shapes and sizes. But in the face of larger IT retail stores opening up, how are the resellers down on the street coping, and what makes their shop more desirable to customers than the one next door? CRN went down to the street to find out.

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By  Colin Browne Published  March 12, 2001

Introduction|~||~||~|Wander down Khalid Bin Al Walid Street in the heart of Dubai, and you’ll understand why residents name it Computer Street. Every other shop is a computer reseller shop.

To the uninitiated, trying to purchase anything even remotely to do with IT on the street is daunting. The shops look alike and sell similar products. Almost every shop sells motherboards, keyboards, mice, notebooks, PCs and carry cases, and the question that faces most customers attempting to buy such products, is who to buy from.

What makes one computer retail outlet more appealing than another? Is it the pricing of the products, is it the size and look of the outlet, is it the IT knowledge that the staff possesses, or is it the products themselves?

This is a question that CRN put to visitors to this Web site in our vote centre: ‘Customers, when evaluating a bid from your computer supplier, what is most important? The results were surprising. Before discussing the results it is important to understand what resellers on Computer Street thought were the results to this question.

Not surprisingly, after questioning many of the resellers, the answer …was price. Now, we know that the Middle East is famous for haggling over price, but vendors say that the IT market has matured. E-commerce has started to trickle in to the region, and vendors are screaming out for more solutions providers, so logic would dictate that price is not the most important factor anymore.

But apparently it is, according to Computer Street’s resellers; price is still the most important factor. However, according to the answers received to the question when put on the Web site for anyone to respond, including end-users, the most surprising result (and many resellers didn’t seem to believe it either) was that the most important factor for customers was after sales support and service, with 60% of the total votes. Even more surprising was that price came in third with 10% of the votes; brand names gathered only 6% of the total votes.
||**||Looking for the best price|~||~||~|Even armed with this kind of information, Dubai’s resellers still insist that customers want the ‘best price.’ Digging deeper into this conundrum, CRN came up with some answers.

A large majority of resellers questioned on the street pointed out that their mainstay in the industry, was not from customers in Dubai wanting PCs and components, but from using Dubai as a hub for exporting to countries such as Iran and Nigeria, as well as other countries in the Middle East. “We use Dubai as an export hub, and this is our main business. We are not concentrating on the retail side, only the wholesale,” said Suresh K, dealer sales, Golden Systems Electronics.

This is all fairly straightforward, but then that begs the question: why set up a retail outlet in the first place on Computer Street, if a reseller is not interested in selling to customers in Dubai? The answer some resellers gave was that by opening a retail outlet, some end-users did come to buy from them.

However, in recent years, Dubai has seen the opening of a few major computer retail outfits such as CompuME and Plug-ins, all of whom have large, airy shops stocking everything from computer magazines, boxes of software to PCs and mobile phones, which could eventually begin to damage the street guys.

It is information that is passed on to the customer however, that is one of the most vital ingredients in making a sale, especially if the customer is IT savvy. And some customers know a lot. Vendors have been known to visit outlets in the city and ask about their own products, and unfortunately, the response given is not always what they wish.

One vendor told CRN that he quite often goes undercover and asks about his own products with resellers, and retailers. The response, he told CRN was not what he would expect, and that products are sold on price and not on whether the product is right for the person asking. “I do this frequently, I go in under cover. I go in and question the salespeople and ask them a lot of questions specifically about our products. I pretend to be a customer,” he told CRN.
||**||No real service so far|~||~||~|“The first thing that happens is that you say you are looking for an anti-virus utility, and they take you to the shelf. But now you have a number of products to choose from, and you ask them which you should choose? They say take this one, and when I ask why, they say ‘because it sells well.’ So it sells. And is that the only reason it is good? ‘Yes, everybody is buying it.’ So I ask why not the other product, and they tell that it is good, but more expensive,” he said.

“In the U.S., it doesn’t work this way. If you go into a shop and them that you want an anti-virus utility, [the shop assistant] is going to say, ‘all right, what are you looking for? Is this a price issue? What platform are you running? These guys [here] don’t even ask you what you are interested in, what is your budget, or anything,” he said.

One other problem associated with this is the actual margin that is gained through selling these products. Resellers on Computer Street all agreed that margins were tightening up, and that due to such fierce competition, goods were even being sold for less than the purchase value, because of that competition. “It is all rather hopeless actually. There are a lot of shops and everyone wants to sell, and they are killing the prices. No-one can keep their prices as standard, and they have to cut them,” said John Thomas, showroom manager, Ardanah Computer.

“It is very hard, to be frank,” he added.

On the other hand, there are some resellers that are managing very well on the street, without having to resort to cutting prices. “Because I don’t sell just based on price, some of my prices may be higher on some products than other resellers, but then again, I only sell genuine products and take a high percentage on my margins for high-end systems,” Samer Bayrakdar, general manager for Direct Computer Systems told CRN.

All this is still based on price, and only a few resellers told CRN that after sales support was a service that they offered. “We do have after-sales service, and it is excellent. We are looking for long-term relationships with customers, including those that did not purchase goods from us in the first instance,” Ali Al Hili, general manager for Capriwood told CRN.
||**||Making that service happen|~||~||~|CompuMe’s Boudi Ghandour, vice president, Products & Procurements for CompuME agrees: “Where others market themselves as being the cheapest so that people come to them, the most important aspect of this business for us is the after sales service.”

“What I have been hearing in the market, for example, is that some [resellers] will kick customers out if they come back with a return, they won’t even talk to them,” he added.

There is more to after sales service and support than just selling warranties and dealing with repairs for products. For example, anyone that knows Computer Street will also know that it is also named Bank Street—-for obvious reasons—-and that many businesses are situated there as well.

A perfect place for a reseller to be placed—-all that business to be waited upon—-but not one reseller that CRN spoke to, took advantage of the business sitting on their doorstep. The emphasis was on business coming through their door, rather than actively seeking it.

“Our business is very much restricted to showroom sales. This is because of the low margins that we are forced to undertake. You will find some resellers do visit the offices [for repeat business], but you will find those dealers already have a margin and can actually go out and deliver to these businesses,” Ashley Rodericks, sales supervisor for Computronic Trading told CRN.

“But who would take this option? Saying it is one thing, making it happen is another. We have tried that in the past, and we failed miserably,” he added.

Computer resellers in Dubai are also at risk from world market forces outside their control. As many suggested, the main focus of the business is re-exporting outside of Dubai, mainly to Iran. “We are into [selling] HP and Epson products because we export to Iran,” George Philipe, accounts, MicroContacts told CRN.

However, as the world moves forward, Iran is a market that vendors are itching to get into as soon as sanctions are lifted and they are able to set up offices and channels and do business there. When, not if, this happens, there are going to be a lot of resellers in Dubai left in the cold, and without building up the retail business in Dubai—-for Dubai customers—-a lot of resellers will be going out of business.

It all comes down to three basic fundamentals to run a successful computer retail business, especially if market dynamics take away the re-exporting business: service, appearance and of course, price.

Unfortunately, it seems that Dubai’s Computer Street resellers have a lot to learn about all three.

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