Feeds

Onsale flogs new PCs at zero margin

How low can you go?

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

Onsale is to sell new PCs at zero margin over the Web. The loss-making Internet auctioneer will sell PCs and accessories for the same prices at it pays Tech Data, its wholesaler. The company reckons its can carve out an operating margin from banner ads on its Web site, flogging service contracts and leases and by charging small handling fees for each order, according to the Wall Street Journal. We can also assume operating cash flow benefits for Onsale, achieved by playing off credit card payments properly against supplier credit. This is really setting the cat among the pigeons. Here are most PC builders struggling by on early teen margins, and along comes a company that says it will do it for free. Or to be more precise -- at cost. Onsale appears to have the run of Tech Data's warehouse -- the company says it can supply 35,000 SKUs. Channel conflict rears its ugly head once again. Trade-only distie Tech Data is effectively selling PCs direct to the general public -- with Onsale providing the retail veneer for 35,000 SKUs sold at cost. It is a given that Tech Data handles all the pre-sales logistics -- configure to order, courier services, delivery and so on. It does this for any number of resellers. But what are the financial terms of the deal struck between the two companies? We suspect that Onsale is acting more as a rep, or sales agent, as opposed to reseller. Sensibly, Onsale should account for only the agent element--the bit that generates the operating income -- of each PC sales transaction as turnover. But with Internet stocks trading on heady multiples of turnover, it will be very tempting for company to record each PC sale in its entirety as revenue. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
BT said to have pulled patent-infringing boxes from DSL network
Take your license demand and stick it in your ASSIA
Right to be forgotten should apply to Google.com too: EU
And hey - no need to tell the website you've de-listed. That'll make it easier ...
prev story

Whitepapers

10 ways wire data helps conquer IT complexity
IT teams can automatically detect problems across the IT environment, spot data theft, select unique pieces of transaction payloads to send to a data source, and more.
The total economic impact of Druva inSync
Examining the ROI enterprises may realize by implementing inSync, as they look to improve backup and recovery of endpoint data in a cost-effective manner.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.