E-exchange closes, may try again

Distributors are sceptical that an online marketplace for quick-fire sales between themselves and resellers would be viable in New Zealand.

Distributors are sceptical that an online marketplace for quick-fire sales between themselves and resellers would be viable in New Zealand.

Their concerns come as an Australian exchange meant to expand to New Zealand is forced to close - but hints it would like to try again.

Distributors cite problems ranging from responsibilities under the Consumer Guarantees Act and Fair Trading Act, to parallel importing and distribution agreements, and add that New Zealand is too small a market. All say the idea "sounds good in theory" but faces many problems.

Sydney-based E-exchange was the most successful licensee of a worldwide chain, transacting $A12.8 million of trade in the six months it operated. It announced that a slated New Zealand exchange was on hold late last year pending talks with investors. E-exchange offered specials on a wide variety of products, taking a cut of 0.5% on each transaction, and was reliant on the support of distributors.

But founder Braham Shnider says the operation folded over the Christmas break after not receiving operating funds for several months from the main licence holders in Singapore and Ireland. This week the Singapore arm filed for liquidation and the fate of the others hangs in the balance. The Korean site is still operational.

Shnider has since started a consultancy called Channel Enablers but says he is holding talks with a number of parties on resuming the exchange service. "I think there is value in the model but only if it is a global model," he says. "A regional or local model won't work; there has to be the option to [look] offshore [for products]."

Ingram Micro managing director John Dunbar says the idea "has a pulse" - but only for certain types of products.

One account manager at a major distributor, who asked not to be named, says his company had taken part in an European exchange when there was a shortage of hard drives - but says New Zealand is too small a market for its own exchange.

Besides, he says, exchanges throw up issues such as the breaking of geographical distribution agreements if products end up overseas. Calling exchanges "hard to police", he says other countries don't have such relaxed parallel importing rules and the end buyer may find warranties invalid. There is the additional risk that pirated product sold through an online exchange is hard to detect.

Tech Pacific general manager Tony Butler says if an exchange compromised the sales channel and ended up selling direct to the end user, Tech Pacific would steer well clear. Most of the large distributors such as itself and Renaissance had their own sites, he says.

"The line of manufacturer to distributor to reseller to user has been in the past in linear fashion. But in an e-enabled world that is just not true any longer. People can own things for a microsecond."

Butler believes an exchange selling odd bits at rock bottom prices to end users would only work here if it operated in an auction technique.

Lawyers agree the Consumer Guarantee Act does not apply to supplies of goods by auction and would therefore relieve distributors and resellers of responsibilities such as warranties.

In an exchange, it would also be harder to police the usual sales system when the distributor "contracts out" of its responsibilities to the reseller when the product is known to be going to a business end user. Questions also arise over whether an exchange is liable.

Other trading sites, such as eBay and TradeMe, except themselves from responsibilities in any transaction.

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