Merisel to Upgrade Reseller Program

By Lisa Terry, Contributing Writer



Government and education resellers will be able to access a complete spectrum of Merisel's government contract pricing right in their own systems as a result of a soon-to-be-announced program upgrade by the $5.1 billion distributor.

Under phase two of the new program, Merisel Inc. will enable these resellers to incorporate into their own databases a complete matrix of products and prices particular to their specific contracts, and then receive daily updates to the data via electronic data interchanges (EDIs).

Phase two now is in beta testing, slated for completion early this year. Phase one of the program, begun in August 1999, provided only commercial pricing, general government pricing and General Services Administration pricing in this way.

"If I'm a reseller, having a catalog available within my own system that I can pull up to automatically access the price while I'm in the field talking to a customer is a great competitive service," said Brett Miller, distributor and reseller analyst with A.G. Edwards & Sons, St. Louis. "Maybe that does help win the business at the end of the day."

The offering meshes with the El Segundo, Calif.-based distributor's increased emphasis on customer service and its paring down of operations to focus on the North American market, moves the company has taken since nearing bankruptcy in 1996.

To provide the contract pricing data and enable automatic updates, Merisel had to first integrate its legacy systems with its SAP R/3 enterprise resource planning system, an effort that began last summer.

"Resellers can now get multiple pricing per SKU [stock-keeping unit] along with the commercial price," said Danielle Kithcart, senior business analyst with Merisel's IT division. "They can now have several different prices depending on what phase of the government they're dealing with: state, local or federal [or education]."

Resellers must "work with their systems to receive data properly, which adds some expense on their end," concedes John Lindgren, program manager with Merisel's government and education division. "But it's well worth it."

The data includes Merisel's entire catalog of 50,000 SKUs from 500 manufacturers as well as product availability information. About 150 of those manufacturers provide Merisel with discount prices for various types of government purchasing. Pricing categories are: federal, state and local, K-12 and higher education, and GSA schedule pricing. Commercial pricing also is available.

"Over 100 of our customers hold GSA pricing, supported with about 50 letters of commitment from manufacturers," Lindgren said.

Resellers may use the data to create orders, but "it also allows them to take this massive database and manipulate it to create their own customer catalog, which they may post on their Web sites," Lindgren said.

Delta files containing that portion of data that has changed on any given day are transmitted daily to participating resellers, with full files available for weekend downloading.

But resellers may elect different update arrangements, Kithcart said. Daily changes may include new pricing, SKU and product information. Resellers also may check inventory availability via EDI.

The same data may be obtained from sales representatives or via SELline II, the distributor's secure Web service for those resellers not interested in the EDI option.

"It depends on the size of the customer and their willingness to invest in the infrastructure that determines which they will use," Lindgren said. "The bottom line is we'll support anything the customer wants."

Merisel's Government and Education division is celebrating its first anniversary this month, and Lindgren said the group's sales are multiplying.

"We'll be in the top three" in sales to government in 2000, with Ingram Micro, Santa Ana, Calif., and Tech Data Corp., Clearwater, Fla., said Lindgren. "We're almost there right now."

Merisel enjoys "loyalty and a good reputation with its customer base, but has not been able to build on that customer base by taking share away from some of its hurting competitors out there," said A.G. Edwards' Miller.

The firm currently has a "maintain" rating on Merisel stock, and Miller has noted with approval the infrastructure and personnel changes the company has made to improve its position.

On Dec. 27, Merisel's stock was trading at 1-7/32, with a 52-week range of 1-1/8 to 3-3/16.

Merisel's offerings to government resellers include a bid desk, GSA schedule support and various services such as inside and outside sales, engineering support, special manufacturer pricing, certificate of origin and Energy Star compliance.

Lindgren said more services will be added in 2000.

"We have a very strong focus on developing e-commerce solutions for customers," he said. To win contracts, resellers "must be able to sell products to government through e-commerce. That's costly for the customer to set up, so we're looking to set up a solution."

A.G. Edwards' Miller is bullish on the potential for distributors' sales to government in 2000.

"There is a lot of data saying information technology budgets will be 5 percent to 10 percent higher in 2000, and in 1999 so much of the budgets went to [year 2000] remedial services," he said.

In 2000, "they'll actually be buying hardware and applications, and that's what distributors sell," he said. "The government is behind even in remedial services, so the upgrade cycle in government should be enormous." Business: A distributor of information technology products to resellers throughout North America

Location: El Segundo, Calif.

Chairman and CEO: Dwight Steffensen

1999 Revenue: $5.1 billion

Ticker: MSEL on Nasdaq

Web Site: www.merisel.com