SHARE

IT Distributors End Free Ride on Shipping

IT distributor Tech Data will institute a $2 handling fee on all orders shipped, the company revealed during its earnings announcement and call Aug. 21. Tech Data’s move follows a similar one announced by its larger rival Ingram Micro earlier in August. A third IT distributor, Synnex, is "taking a wait-and-see approach" to adding such […]

Written By

Jessica Davis

Aug 21, 2008

Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More

IT distributor Tech Data will institute a $2
handling fee on all orders shipped, the company revealed during its earnings
announcement and call Aug. 21. Tech Data’s move follows a similar one
announced by its larger rival Ingram Micro earlier in August.

A third IT distributor, Synnex, is "taking a wait-and-see approach"
to adding such a handling fee, a spokesperson said. The company does not
currently charge such a fee.

And Avnet’s Technology Solutions group also started
passing through fuel surcharges this month to its partner community for all
orders shipped from an Avnet facility or one of its factory drop ship
suppliers.

"It’s a direct pass through—whatever they get charged by the shipping
company, that’s the amount they pass through," the spokesperson said.

Tech Data CEO Bob Dutkowsky told Channel Insider in an interview
that rising fuel costs prompted the institution of the handling fee.

"For whatever reason, IT distribution had evolved to offer free freight
while the vast majority of other businesses made you pay freight,"
Dutkowsky told Channel Insider. "That made sense when gas was 50 cents a
gallon, but now gas is $4 a gallon."

Similarly, he said, back when a laptop cost $4,000, freight made up a small
percentage of the bill. But now that laptop prices have dropped and freight
costs have risen, shipping makes up a much larger portion of the total cost, he
said.

The new Tech Data handling fee is a flat rate per order, so VARs that
consolidate orders can reduce the amount they will pay. And many VARs may not
pay the fee at all, but instead may choose to pass it along to the end
customer.

"In the grand scheme of things $2 is not tremendous," Dutkowsky said.
"$2 still does not cover our costs. This is not a profit initiative by
Tech Data. Our goal is to defray some of the cost of shipping and
freight."

Ingram Micro sent a letter to VARs earlier in August, announcing similar plans.
"The operational costs of doing business in North America, and around the world, are steadily increasing—especially
when it comes to freight and transportation," the company said in its
letter. "…Ultimately, our goal is to address the rising cost of freight
and use our core logistics expertise and scale to help you manage your costs as
best we can. This was a difficult decision, but a necessary one. Ingram Micro
remains committed to ensuring that your shipments reach their destinations in a
timely and efficient manner."

IT Distributors End Free Ride on Shipping

Jessica Davis

Recommended for you...

Company

Categories