Manchester-based broker DP Data Systems will no longer trade in “grey” market tech, according to its boss. Of course, this will only be the case once a new home is found for existing inventory already in the warehouse.
The company told us it has just “ceased” buying grey market kit, which IT vendors term as any product imported from outside of the European Economic Area.
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Steve McKeever, managing director at DPDS, told us via email that, contrary to talk in the channel, the business is “not going into administration”.
He said that rather more “simply, a strategic decision has been made to exit the grey market and thus to cease trading in unauthorised products and to instead focus our attention and energies in the authorised channel.”
The wholesaler sells servers, storage, networking, desktops, peripheral and software. Brands include HPE, HP Inc, Lenovo, Juniper, Cisco and Huawei.
The fact is, vendors themselves are often at fault for fuelling the grey market, whether that is from a lack of processes to stem a leaky sales channel or using brokers to make products ‘disappear’.
We asked McKeever if DP had been threatened by a vendor to stop selling grey market goods, how much grey kit he historically sold and how much he has left to flog. We’ve yet to hear back from him.
Whether selling grey goods or not, brokering is a tough game and is getting tougher all the time as physical products commoditise. Last year the UK’s longest running broker, Gamma Global, shut up shop, calling in the administrators after running out of cash.
DPDS reported a sales rise of 6.6 per cent to £52.7m for the year ended 31 May 2014, the last filed at Companies House. The cost of sales didn’t rise in line with the increase in turnover but admin expenses went through the roof, jumping 92.9 per cent to £4.85m.
This left operating profit at £858,000 compared to £553,000 in the prior year. After tax, net profit was £591,000 versus £313,000. ®