Manufacturers are increasingly selling directly to retailers and consumers, hurting wholesalers
Los Angeles, CA (PRWEB) October 12, 2013
Demand for computers, related accessories and software consistently grows from year to year. Though growing demand benefits the Computer and Packaged Software Wholesaling industry, the rise of the direct-sales model has dampened revenue. In addition, the recession caused revenue to fluctuate dramatically from 2008 to 2010. For example, after a 3.0% drop in 2008, revenue plummeted by 12.6% in 2009, only to rebound by 6.8% in 2010. Overall, industry revenue is estimated to grow at an annualized rate of only 0.6% over the five years to 2013 to $351.5 billion, though IBISWorld expects revenue to rise 3.5% in 2013.
According to Industry Analyst Sarah Kahn, “While demand for computers, computer accessories and software is growing, revenue for wholesalers has been hampered by the practice of wholesale bypass, in which manufacturers, most notably Dell and Hewlett-Packard, forego wholesale distributors entirely in favor of selling directly to retailers.” As a result, industry players have sought ways to cut costs to counteract revenue lost from wholesale bypass, including automating their inventory control processes. In addition, the industry has consolidated, with the number of businesses in the industry contracting by an average of 2.0% annually in the five years to 2013 to maintain profit margins in the face of the growing wholesale bypass trend.
Despite these negative trends, IBISWorld projects that revenue for the Computer and Packaged Software industry will grow in the five years to 2018. This growth will follow a rise in unit sales of computers and computer-related products, as customers are expected to make the purchases of these products that they postponed during the recession.
“Due to a combination of technological advances and productivity improvements caused by recession-era consolidation, the prices of computers and related equipment are anticipated to fall,” says Kahn. Along with overall economic improvement, this trend will encourage consumers and businesses to increase their computer-related purchases, driving up demand for computer and computer-related product wholesalers.
This industry is characterized by a large number of small players that generally cater to their local or regional market only. Concentration is low due to the limited economies of scale to be gained. While larger industry players typically have higher profit margins than lower ones, they cannot make significant gains by becoming entrenched nationwide due to the high cost for good transportation that would cause. Instead, firms tend to operate regionally.
For more information, visit IBISWorld’s Computer & Packaged Software Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
The Computer & Packaged Software Wholesaling industry is composed of establishments primarily engaged in wholesaling computers, computer peripheral equipment, loaded computer boards and computer software. Manufacturers' sales branches and offices with wholesale functions are included within this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.