Citing a weak rand and ongoing margin pressure in the office automation market, Bytes Document Solutions – the official Xerox distributor in 24 African countries – has terminated its long-held distribution agreement with Square One.
Ronnie Oeschger, divisional manager, Office Systems Group and Channel Operations at Bytes Document Solutions, says: "We thank Square One for their contribution to our business," says Oeschger. "Our partnership has been long and mutually beneficial and our parting of the ways is amicable.
"However, the lower end of the market has been commoditised, making it hard to justify a distributor in this segment of the market, especially considering the weakness of the local currency, and our own capability to deal directly with the reseller channel."
The decision, effective 1 March, was made after Bytes Document Solutions conducted a product price review to establish the impact of a weaker rand on its overall business.
"The rand is at its weakest levels since 2003, which is having a knockon effect in the cost of imported products, spares and consumables," says Oeschger. "Removing a layer from the distribution chain will help reduce the cost of office printing for our popular office printers and entry-level multifunction printers."
Bytes Document Solutions, with turnover in the order of R1,35-billion, has created a substantial national logistical and service capability. It is confident that it will be able to reduce the cost of its products by up to 15% by using its own resources, as opposed to those of a distributor.
The company will absorb a number of Square One's employees, along with the Square One reseller portfolio.