Shake your margin maker

As anyone in the PC retail trade knows, there are very slim margins to be made on hardware these days. The value of the market shrank by three per cent last year*, and a full-scale recovery will not play out for a while to come. But the good news is it’s easy to make up the numbers elsewhere with add-on sales or impulse purchase products.

With tablet PCs set to have their breakout year in 2010 and netbooks coming to represent an increasingly sizeable chunk of the hardware market, the industry’s growing emphasis on mobile form factors provides retailers with a range of opportunities to accessorise these devices.

“From our selection of products, we find notebook bags will provide the best margin for the reseller. With notebook sales at an all time high, a notebook bag is the perfect sales opportunity,” says Rene Batenburg, Trust’s UK country director.

“Add-ons or attachments such as software, laptop accessories, printers and cables tend to offer excellent margin making opportunities. Resellers can reap rich rewards from the add-on sales opportunities generated by these lines,” adds Naeem Adam, product manager for VIP.

Interactive Ideas’ senior marketing executive Andy Miles suggests that attracting the market’s notoriously big spenders – gamers – is key to getting a healthy margin. “Console gaming accessories are still proving to be the greatest margin maker in terms of value which is no major surprise, but it has become an area where companies should focus on products which differ from the norm to stand out in the crowd,” he observes.

But it’s not just typical peripherals that provide healthy margins. VIP product manager Matt Parrish claims novelty items can provide “spectacular” results, but are sometime a bit of a risk. “It can be difficult to judge the public’s reaction to them until you take the plunge,” he comments. “Add-on sales can be more successful, although their popularity is dependent on the success of the products they are associated with.”

Leanne Smith, primary buyer for storage and consumables at Target Components, agrees: “The most popular margin makers are the sensible accessories. These are the types of products that can be used all year round, whereas the novelty products are more seasonal items and may only be used two or three times a year.

“If you market the product correctly you should be able to sustain sales all year round but the likelihood is that run rates tend to be less throughout Q1 and Q2. I would say the Christmas period is definitely the most popular and profitable quarter for these types of products.”

Parrish adds: “The Christmas market is obviously good for the sale of novelty gift items, but I don’t think you should necessarily fall into the trap of thinking that these are the only margin-makers available to you. Printers still need USB cables and laptops still perform better with laptop coolers, whatever time of year it is.”

As well as seasonal concerns, another challenge for retailers can be how to choose and sell these products. Certain items, such as mice and peripherals, will always be popular, but niche or novelty accessories sometimes need to be more actively sold to consumers. Certain accessories vendors, such as Trust, run training programmes to teach resellers how to upsell their products.

“Of course, by placing notebook bags and mice close to the notebook display, you are going to get a share of impulse purchases,” says Batenburg. “We believe that the sales teams in the store need to be aware of the add-on opportunities and what the benefit is to the customer.”

Adam believes that sales opportunities can be lost simply through not talking to the customer to find out what they expect to get with their hardware and what their needs are. “In retail, a lot of the time it’s just a case of asking the customer. From past experience, I’ve found that customers were disappointed when they took their purchase home to find that it didn’t include everything they needed or expected. Internet security software, laptop carry cases, printers and printer cables (which aren’t always included with all printer sales) are prime examples,” he notes.

Miles, however, takes a different approach. “Retailers should be finding a balance, focusing on the quality of their ranges, picking uniqueness over price, with a variation in styles and colours to keep their customers happy and coming back,” he comments. “We would advise for retailers to position margin makers with their related key product to get the best results from impulse buys, leaving the active selling focusing on the key products.”

*GfK figures, February 2010

SOYNTEC NEXOOS 371 PINK USB HUB
SRP: £6.99
Distributor: Meroncourt

They say: “Obtain the maximum throughput of your devices”
Specs: Four USB ports, designed for minimum power consumption, over current detection and protection, compatible with Windows and Mac OS

TRUST MICRO MOUSE – ZEBRA
SRP: £6.99
Distributor: Interactive Ideas, EntaTech

They say: “Ideal to use with your (mini) notebook or netbook”
Specs: Micro-sized optical mouse, suitable for right and left handed users, 70cm cable, Plug and Play, compatible with Windows 7, Vista and XP

LEGO WALKIE TALKIES
SRP: £19.99
Distributor: Interactive Ideas

They say: “Quality walkie-talkies with cool Lego styling to stay connected to fellow Lego maniacs up to a mile away”
Specs: One simple push/talk button, one channel, volume control, works at a distance of up to one mile, includes two walkie talkies

LOGITECH MOUSE M100 WHITE
SRP: £9.99
Distributor: Gem Distribution

They say: “Gives users just the basics for comfortable, reliable control of any computer”
Specs: Full-size, ambidextrous shape, Plug and Play, high-definition optical tracking (1000dpi), smooth cursor control and easy text selection

LOGITECH WEBCAM 2200
SRP: £15.31
Distributor: Gem Distribution

They say: “Easy to install and use… lets you add video and audio to your favourite instant messenger”
Specs: Built-in microphone, captures video and stills, true VGA sensor, manual focus, USB connection, compatible with instant messengers, works with Windows 98, ME, 2000, XP and Vista

ANTEC NOTEBOOK COOLER
SRP: £34
Distributor: VIP Computers

They say: “Protect your valuable investment and reduce heat-related instability”
Specs: USB-powered cooler, pass-through connector included, compatible with both Mac and PC, low power consumption, two double ball-bearing fans, quiet operation

GENIUS WIRELESS MINI NAVIGATOR MOUSE
SRP: £17.99
Distributor: VIP Computers

They say: “Not only eliminates tangled cables, but also is smaller in size, lightweight and easy to store”
Specs: Two interchangable faceplates, mini USB reciever, 800dpi optical sensor, power saving switch, batteries included

PEAK EXTERNAL 4 PORT USB 2.0 HUB WITH AC ADAPTOR
SRP: £6.99
Distributor: VIP Computers

They say: “Provides high-speed data transfer rate of up to 480 Mbps”
Specs: LED indicator when processing, Plug and Play, rubber coating, four USB ports, compatible with USB 2.0 and USB 1.1, comes with AC adaptor

EXSPECT XBOX 360 PLAY AND CHARGE KIT
SRP: £9.99
Distributor: Gem Distribution

They say: “This kit enables the user to charge and play their console simultaneously”
Specs: Contains one rechargeable battery, one USB charge cable and two battery covers (black and white), charges during play or while the console is on, fully compatible with official Xbox controllers

EXSPECT IPHONE IN-CAR HOLDER
SRP: £14.99
Distributor: Gem Distribution

They say: “A neat, compact in-car holder for iPhone. Offers versatility for optimal use in your car”
Specs: Fastens to windscreen via suction mount, twist and turn mechanism, portrait or landscape use, allows access to all the iPhone’s functions

TRUST HD WIDESCREEN WEBCAM
SRP: £34.99
Distributor: Interactive Ideas, EntaTech

They say: “Perfect to chat using MSN/Live Messenger, Skype etc: just plug in and start”
Specs: Ultra high definition 3MP (2048 x 1536) video resolution, up to 12MP (4096 x 3072) still resolution, inbuilt LED lights for better image quality in low light, integrated clamp system to attach to screens, built-in microphone, includes software with special button to upload videos to Youtube with one click

TRUST COMBAT NETBOOK SCHOOLBAG WITH MOUSE AND HEADSET
SRP: £24.99
Distributor: Interactive Ideas, EntaTech

They say: “Safely carry your netbook or just use it as a cool school bag”
Specs: Backpack with dedicated netbook compartment (up to 12 inches) made of strong padded and water resistant material, lightweight stereo headset with adjustable flexible microphone, compact three-button optical USB mouse

VEHO BLUETOOTH DONGLE
SRP: £12.99
Distributor: Target Components

They say: “Amazing micro size bluetooth dongle. Transfer information from your bluetooth device to your PC or notebook”
Specs: Micro size, 20m range, works with USB 1.1 and USB 2.0, maximum date rate of 1MB per second, LED status light indicator, compatible with Windows 98, 2000, XP and Vista

VEHO USB MAINS ADAPTER
SRP: £6.99
Distributor: Target Components

They say: “It’s always annoying having to turn your PC on to charge your MP3 player or iPod. Now you don’t have to”
Specs: Plugs into UK Mains, compatible with USB products including all Veho devices and new iPods and iPhones