EXCLUSIVE: Retail Suppliers Face Cash Flow Problems After Synnex Rationalise Partners

Synnex, Australia’s largest consumer and enterprise technology distribution Company is undergoing a clean out of accounts and stock held in their warehouses, with several small distributors who have “limited or small” turnover set to be given the boot.

The move is aimed delivering improved efficiency according to management.

Currently several small distributors who cannot afford their own warehousing and logistic operations use organisations such as Synnex to warehouse appliances, TV’s and accessories as well as PC and other technology SKU’s bound for retailers such as Harvey Norman, JB Hi Fi as well as Target and NARTA Group members. The only problem is that their stock are often slow sellers and when stored for long periods of time deliver inefficency for their logistic partners.

According to Kee Ong the CEO of Synnex Australia the move “Is in line with our mid to long term go-to-market strategy”. He said.

He added “At the same time, we will need to add more brands to enrich our offerings as well”. he told ChannelNews.

The move could create a big problem for some operators who are offering retailers consignment stock and are only shifting small volumes said one observer.

“If they have to move on from Synnex, the cost of their goods could go up and then could end up paying a higher price or moving to liquidate the stock in the market.

According to the CEO one distributor who is not affected by the Synnex move the decision could have a “profound” impact on a small distributor who will have to find a new logistic partner”.

They said “as we understand it a distributor who has been told to move on will have to find someone like Fox Logistics, Toll or Australia Post to warehouse their stock. This is expensive as these guys charge between $12 to $18 a pallet per week”.

“We know of one operator who has already maxed out his credit on the stock sitting on the floor of Synnex and is now facing the real possibility of having to dump the stock on Greys Online, Catch Of The Day or with retailers such as Seconds World”.

“This in itself is going to create pain as the retailers who are selling the same stock have taken on a brand in good faith only to find that the price of the same goods are cheaper on Catch Of The Day”.
They added” A new distributor will also want to do credit checks, so the easiest exit is to get rid of the stock quickly along with the liability. This could give them breathing space before the next lot of stock arrives”.

“There is also the issue of cashflow, if a small operator has suddenly lost all the profit, he had in a shipment sitting at Synnex he is going to struggle to get funding for his new stock.

“Synnex will work with them initially, and if they are being kicked out it will be a last resort action”. He said.