Making money in computing retailing business: when can a
computer retailer make money on added value?

Abstract: Making profit is the foundation every modern company rests on. No profit, no
business.

During the passed 10-15 years making profits in the computer retailing
industry has been harder and harder. Margins has has lessened and due to the
simplification of computers and increased easiness to understand computers
even more unqualified people may compete in the business.

As an effort to increase the profitability of the industry niching was
discussed as possible for success and earning money on added value, which is
the theme running all through this thesis.

The theories this thesis rests on are basically theories about a high
quality service, which is the main foundation for any success: no high
quality offered, no success. The high competition in this industry is one of
the corner stones of the thesis as well due to the heavy competition in the
investigated industry. A third important and clear corner stone are the
theories about rules of public procurement which Government owned, or
partially owned companies, has to follow.

The fact that added value is a subgroup of customer value is natural, but in
difference to added value, the concept of customer value is clearly defined,
while the meaning of added value is rather ambiguous and undefined. The
theories about added value stretches from, spoken from Telia as telephone
answering services to co-production of values, some theories even say that
added value can only be defined by customers and not by the industry
offering it.

In this thesis, 25 industrial companies was to be interviewed, of which 14
accepted or had their key responsible in question available. This gives a
response frequency of nearly 60%. Five out of the 14 answering companies
have to follow the rules of public procurement.

The interviews have been carried out by Perspektiv Undersökningar by phone
during the fortnight before mid summer 2004. Eight questions regarding added
value, its importance and what added values to pay for have been asked.
Very clear in this study was partially the importance of added value, and
rather surprising after heaving read the theories, how unanimous the
respondents were, who all of them mentioned added value to be the relation
between customer and retailer and the importance of suppliers ability to
understand and see what the customer need.

It is very clear that the ability to make money on added value is limited as
the customer regards the added value of relation as obvious for any business
transaction at all. However, the customer is prepared to pay a higher price
to the supplier offering added value, than to suppliers just caring for
transactions.