Margins are slim, but the opportunity is high.
Laptop sales margins are too slim. Everyone knows this. Everyone’s been saying this for as long as PCs have been around. Well, things are different now, haven’t you noticed? Can you think of anything about this business that’s the same as three years ago?
“Margins are slim,” opined Troy Olson, chief business development officer of Les Olson IT. “It’s quite a bit different than the MSP business in that most of us have been in for years, but it’s a great business and something you should be in. It makes you stickier with the customer.”
“Margins are slim,” concurred Shane Coffey, vice president of product management at Sharp. “When we invested in Dynabook, it wasn’t necessarily that we were considering how much money you can make, but strategically what the benefit is to our dealers and us to be involved in laptops.”
In the Know
The advantage of selling laptops is the benefit of selling something every office needs, and most importantly something every office already knows they need.
“You don’t have to convince them that they need a laptop,” said Coffey. “They’re already using laptops. You just have to convince them that your laptops will fit their needs and have some benefits to them over whatever they’re using today.”
Laptops aren’t necessarily the way to get your foot in the door with a brand new customer. Big box electronics stores and the internet might be the first places they think to look. But what they can be is the start of a conversation, a shift in perspective from standalone purchases to providing technology that is more integral to daily business.
“Where we have to change those margins is adding additional value,” said Olson, cautioning that competing on price can be a hard way to start. “Buyers are so educated today. Every buyer just hops on Google and checks you out.” The key is to expand the conversation beyond numbers to services, warranties, and in today’s workplace, even product availability.
Laptop Sales Drivers
Melissa Schielzo, product management specialist at Sharp, found the pandemic and supply chain issues to be a surprising leverage point for laptop sales. “It’s kind of challenging when you’re trying to get somebody to take on a new product line,” she said. “People tend to want what they’ve always bought. But when they can’t get what they’ve always bought, they’re much more open. It’s actually helped us grow our laptop business aggressively over the past few years because the supply chain was so tight.”
“Especially during the pandemic, we stocked PCs,” added Olson. “We bought them where we could because of the supply chain issues and the shortages. We have nine warehouses so that has some advantages. We have two network operation centers. We manage everything from the server to the desktop to security to backup to storage. The PC side definitely follows.”
Being the solution provider for one issue, even a simple procurement issue, opens the door to more. Consulting on laptop sales easily leads to conversations about how those laptops will interact with the rest of the office environment. Warranties, security, networking, managed print. It’s easy to make the case for the convenience and reliability of handling all of that through one company.
“Consider how these products work together,” observed Coffey. “This is how the dealer looks at it. They’re selling laptops and they’re selling four printers and they’re selling desktop monitors. The combination of these products is far more valuable than any one product. It’s much easier to sell things to an existing customer than to go out and find a new customer, always.”
Target Marketing
Grow as your customers grow. The big multinational might not be your best place to start, as enticing as the volume of their potential business might be. “When we got into the IT business eight or nine years ago, we partnered with an industry consultant who told us you want to focus on companies with somewhere around 15 to 50 desktops,” said Olson. “We’ve expanded beyond that, but small- to mid-size customers is where we really focus.”
Don’t overlook how much the pandemic has increased demand too. Anything that changes the flow of the workday will have people reassessing whether the technology they have still meets their needs.
“Everybody who has a hybrid work style now needs double monitors, said Sharp’s Schielzo. “You need a setup at home and a setup at work, you need the capability to print at home. There’s been an expansion in demand. If you don’t travel for business, you don’t care if your laptop is big and clunky, but if you have to take it home two or three days a week, you do care. You want something that’s powerful but still lightweight and portable, so those types of models are on an upswing.”
The return to the office era has been met with mixed enthusiasm from office workers, so something as simple as a commute-friendly laptop might be just the solution a client needs to start consulting you on other issues.
“Selling laptops is, in a way, an alternative to selling a document system,” said Coffey. “It’s a tool to expand your business within document systems customers and to attract and retain new customers who then become managed systems customers, and then you get all these other revenue opportunities. It’s three or four times the document systems profits once you get them into services.”
The more services you sell, the more indispensable you become. “You really become a trusted advisor to them,” said Olson. “If the copier goes down, it’s not a great day, but if your network’s down, you’re shut down.”
But that responsibility can be a double-edged sword, so be sure you’re prepared to move into this space. “If you’re going to go into managed IT, that’s a very serious commitment to make because there’s a lot of certifications,” emphasized Olson. “You’re dealing with situations where the network goes down or somebody exposed somebody’s data. There’s a lot of scrutiny. If you’re just selling hardware, it’s not nearly as complicated.”
The stakes are seldom higher than with institutional buyers such as local schools, hospitals, and universities, but now’s a great time to get into that space because educators are reconsidering their attachment to the ultra-low-cost Chromebook, which forgoes traditional software in favor of Google’s cloud apps, training students on an ecosystem they may not use in the workplace.
“Now schools are seeing that they have students graduating who don’t know how to use Microsoft and that’s not preparing them for the world,” said Sharp’s Schielzo. “We’re seeing an uptick in schools purchasing Dynabook laptops because we run Microsoft, and their programs prepare them for the world, and Chrome doesn’t have an answer for that.”
Olson sees Chromebooks as another conversation-starter sale. Rather than trying to sell labor-intensive services like imaging devices, he’ll drop-ship them to the customer. Olson said, “The value you bring is helping that IT director at the school with the ordering process, offering some potential services after the fact, especially repair and warranty.”
Outside the Laptop Sales Margins
Overall, the focus on PC and laptop sales margins is misleading. A foot in the door is priceless. “It’s a very easy entry point into a dialogue that leads to managed services, which is where every dealer I talk to wants to go,” said Sharp’s Coffey. “You don’t have to convince the customer they need a laptop. You just have to convince them to buy yours.”
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