Acer vows action after KSA dealers complain

Acer has assured its partners in Saudi Arabia that it will take steps to protect profitability

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By  Andrew Seymour Published  July 17, 2008

Acer has assured its partners in Saudi Arabia that it is taking all the steps it can to protect their profitability following concerns that price-cutting among some players is harming the authorised channel.

Local resellers in the Kingdom have urged Acer to clamp down on signs of grey market activity and irregular pricing behaviour that impact their ability to operate profitably.

One Riyadh-based commercial reseller said it was frustrated at buying in bulk through the vendor's official distribution channel only to see competitors in the same district selling Acer products for identical or lower prices.

"Some small shops have little in the way of expenses and they look to make more sales by selling at low prices," said the reseller. "It is the responsibility of Acer as the mother company to solve it because if it doesn't the market will go down. If I continue to see colleagues selling the same products for lower than I can then I will not buy from Acer anymore. They must take serious action against anybody that buys from the grey market."

Another Acer partner claims that price discrepancies between the UAE and Saudi Arabia continue to be exploited by grey marketers and opportunistic traders.

"This affects the mentality of the customer," complained a source at one large Acer corporate reseller. "If they find the laptop for SAR100 (US$26) less in Dubai they will not come and buy from us in Saudi Arabia. They will only need us for maintenance services."

Speaking at a gathering of its top Saudi partners last month, Shashank Sharma, country manager for Saudi Arabia, Egypt and East Africa at Acer, revealed the company has already taken measures to eradicate cases of dealers buying products from unofficial sources and selling below market prices.

Representatives from Acer have visited resellers guilty of these tactics to convince them of the benefits of joining its channel programme and working with the company. Sharma insists the firm will step up this exercise during the second half of the year, adding that it also has other policies to control the situation. These are likely to be used with discretion and may therefore not be visible to authorised partners, he said.

"I believe that resellers, especially in Saudi Arabia, are ready to listen to you to make sure that they are in line with the vendor and the distributor," Sharma told Channel Middle East.

"They would like to make more money out of the products and they are not into under-cutting a lot because they are sensitive to profitability."

One reseller said recent grievances over profitability may be exaggerated due to the softness of the Saudi channel during the second quarter, while Sharma believes that a recent grey market ‘disturbance' caused by several unnamed traders who sold product below cost from Jebel Ali could also be to blame.

That incident, which is understood to have occurred in May, damaged the local Saudi channel and angered dealers that honour the policy of purchasing through the vendor's official in-country distribution partners.

Acer is confident that the incident will not be repeated following the work it has done with its distribution partners to identify the culprits. "We cut down on it and we went to those people and spoke to them," revealed Sharma. "We would like to believe that we have resolved it now and hopefully we will manage it much better going forward," he said.

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