This article first appeared at IT Business, Editor Regina Böckle
Last update 7 months ago by Patrick RuppeltThe distributors' announcement is clear: they will charge all resellers the freight costs in pennies and nickels. In future, the same obligations will apply to all, regardless of whether they are top system houses or small online retailers.
The time of discussions is over. In future there will be billing. The broadliners also want to pass on the actual freight costs to the trade. "Freight-free was yesterday" is the cry. Our overview shows what the current models look like.
Although official price lists for freight existed in the past, they were only demanded 1:1 by a part of the trade. This is especially true for broadliners, who for decades were able to compensate for freight costs with product margins. But margins have fallen, while the costs for transport, tolls and fuel have risen. The consequence: freight costs will be shown separately in future and added to the invoice for goods.
Nevertheless, some partners rubbed their eyes in surprise in July when IT-BUSINESS reported on the distributors' "freight-free-is-over initiative" and presented the current conditions in an overview table according to the distributors' statements. "The information in this table does not necessarily have anything to do with the realistic market level," the sales manager of a system house in Usingen wrote to us in response. Many customers are supplied by distributors freight-free or at lower prices. Numerous other resellers confirmed this and demanded, among other things, "a clear line", "calculable freight costs for purchasing", but also models that allow smaller items, such as consumables and accessories, to be purchased at low cost and at short notice.
Clear line called for
Overall, the reactions show: Retailers are willing to pay if the conditions are transparent. But then the logistics and RMA service must fit. "It simply must not happen that freight is charged twice for two devices ordered in one order," clarifies Patrick Ruppelt of Killus Computersysteme. "How the Distris negotiate their contracts with delivery service providers in a sensible way, how they get a functional grip on their logistics and how they should organise their distribution channels - these are all questions that not the retailer and certainly not the end customer has to sort out."
In the view of Dexxit sales manager Hans-Jürgen Schneider, "freight costs will remain the big issue next year". All broadliners have now announced that they will actually allocate the costs. The question is, however, how consistently this will be implemented.
How distributors assess the situation
For those few distributors who have always demanded freight charges from their customers, little will change: "We see no reason to raise our shipping charges in the foreseeable future, as long as the costs don't get completely out of hand," explains Soft Carrier Managing Director Thomas Veit, for example. The situation is different for the broadliners, who are currently in intensive talks with their customers in an attempt to actually claim these costs for the first time. Delo expresses a similar opinion on this question. Despite rising logistics costs, a large part of the costs will not be passed on to the customers because the freight costs are part of the negotiated conditions.
At the Saarbrücken-based distributor Fröhlich + Walter, Marketing Manager Jörg Klawitter sees little need for action so far: "In principle, our reseller partners pay the costs of 4.35 euros for parcels weighing up to 30 kilograms. For those who order online, the freight costs are waived for orders with a value of 300 euros or more, but not for forwarding goods. We don't have any surcharges for small quantities or minimum orders." In this way, the prices for freight could be kept constant for a long time. However, one thing is out of the question for Fröhlich + Walter in the future, as Klawitter emphasises: "In any case, we will not deliver freight-free and then add the freight to the product prices.
Not all traders are paying the whole bill yet
In the past years, the Straubing-based distributor Also, almost as a lone fighter, had tried emphatically to bring about a consistent turnaround in dealing with freight costs, i.e. to actually charge the costs. Since this summer, competitors have also actively taken up the issue.
How many exceptions are there?
Actebis Peacock does not provide exact figures on this question. Also Germany manager Thomas Kasper says: "There are large customers in the system house and online environment who generally purchase freight-free in distribution today. The percentage of those who do not pay is probably only small. But they in particular - due to the strength of their turnover - cause more freight costs than smaller partners, which is why the coverage of freight costs in distribution is generally far too low." So Deutschland also informed its customers in writing about the changes in freight cost charging.
Ingram Micro is currently in the process of changing the previous goodwill regulations, as Vice President Sales Marcus Adä explains: "For a long time, several of our customers were supplied freight-free, which we no longer do. In future, we will pass on freight costs to them. In general, we work closely with our customers to offer the most cost-effective shipping solutions for all, for example through bundled shipments, longer and fixed delivery schedules or direct deliveries of orders to end customers on behalf of our customers."
With Siewert & Kau Ware, on the other hand, specialist dealers who order goods worth at least 250 euros via the Internet still do not have to pay any freight costs. Originally planned as a limited campaign at the end of 2007, the Bergheim-based specialist distributor decided at the beginning of 2008 to continue this offer indefinitely. "What was originally intended to relieve our sales department during the year-end business has developed into a popular ordering option for our customers," says Managing Director Björn Siewert, explaining this decision.
Persuasion needed
In personal discussions with reseller partners, Tech Data CEO Simone Frömming has also made it clear that freight costs will have to be paid by everyone in future. According to its own information, the broadliner still pays around two thirds of these costs out of its own pocket. "We have had numerous discussions with customers and most of them have found understanding for our model of action," Frömming reports. The fact that all broadliners are currently addressing this issue is noticeable here. In addition, they are trying to motivate partners to order cost-efficiently by means of various incentives.
When asked how large the share of customers is who pay all freight costs in full, Devil did not give any concrete information, but Devil boss Axel Grotjahn made it clear that the current model is absolutely cost-covering. "Retail partners can order online until 1 p.m. and receive the goods free of freight charges. We have achieved noticeable increases in turnover with this, and in addition, a large part of the total turnover is shifted further into the morning, which equalises the peak times from 4 p.m. to 6.30 p.m. and thus brings us savings, as we can better utilise the existing warehouse staff. We pass this advantage on to our customers."
There are also fixed, contractually regulated freight charges with a number of specialised trade co-operations, as Devil's overall sales manager Jörg Hasselbach adds. "In addition, our individually agreed or standard freight conditions apply.
Fulfilment services are being used more
One lever that resellers can use to optimise their freight costs is the fulfilment services of the distributors in addition to bundling orders. According to Thomas Veit, head of Soft Carrier, these services are also becoming noticeably more popular: "There is an increasing tendency for the supply chain to be streamlined and for deliveries to be made directly to the user by the distributor. That is a very clear trend.
Delo also recognises a similar development: "The fulfilment services are used extensively by our customers. This trend should also be emphasised with regard to the positive maintenance of returns management, customer care and disposal of outer packaging.
Also Germany manager Thomas Kasper sees a lot of potential for partners here: "So far, only a small proportion of our customers use fulfilment services. Against the backdrop of rising freight costs, falling product prices and, at the same time, narrowing margins, we expect this share to increase in the future. Because this can save unnecessary transport routes, this development is extremely welcome from an economic and also ecological point of view."
Ingram Micro says that 50 per cent of its customers already use fulfilment services, while Devil currently has about five per cent.
