Analysis: Disties and the dollar

Distributors say they take a bigger gamble on exchange rates than people realise.

While the Australian dollar enjoys a continued period of strength against the Greenback, many IT buyers are left wondering why prices of hardware and software have been static?

When we asked the question last year, customers blamed resellers, who quickly shifted the blame to distributors.

But distributors say they're often stuck with fixed Australian dollar prices from the local branches of multinational vendors.

And those that buy products in US dollars say they nervously watch the exchange rates, often several times a day, because a big drop in the local currency could make the difference between a reasonable margin and a loss.

Don't diss the distributors

When CRN spoke to resellers last year, many were quick to blame distributors for keeping prices artificially high.

"The Australian dollar is going up all the time and the distributors do pass it on, but they definitely don't pass it on as quickly as when the dollar goes down," says Mark Gluckman, managing director of Sydney systems integrator Regal Information Technology.

"When the dollar goes down, the distributors need to manage their losses.

"Now the distributors say because they lost so much money back then, they need to make it back now."

But distributors say that is an unfair interpretation of how they operate and the risks they take in buying goods from overseas in foreign currencies.

"When you had people last year criticising distributors, they have to understand that distributors are taking the currency risks away from them," says Darren Byrnes, director of business development at security and compliance software distributor Synergistex. "We could lose quite a bit of money if the dollar fluctuated badly."

In addition, the local offices of many large software vendors set the price in Australian dollars.

"Exchange rates only affect the products that we buy in foreign currency; from most of our larger suppliers, we buy in Australian dollars," says Laurie Sellers, managing director of ASX-listed distributor itX Group.

Read on for why every product purchase is a guessing game for disties.