Motorola issues stark warning on grey stock

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Motorola has direct distribution deals with 20:20, Brightstar, Data Select, Fone Logistics and Unique in the UK. Last week, sources claimed to have received notification from Motorola that it had ceased trading with Data Select and Unique and to look elsewhere for Motorola UK stock.

All parties denied any change in their working relationships, but Motorola UK and Ireland general manager Jim Michel (pictured) said Motorola was reviewing its distributor relationships and was unlikely to support five partners going forward.

Michel said: “We are focused on clearing up this issue. We are reviewing distribution to stop grey market stock entering the country. We are only going to license these companies to configure handsets if they buy direct from Motorola in the UK. They have got to play by the rules.”

Motorola is expected to trade only with 20:20 and Brightstar in the UK in significant volume next year.

Michel said: “We’ve been talking to a couple of distributors about how we’d like to work with them. The model has got to change. The market’s shrinking. There’s not enough to go around. I am not sure we can sustain five distributor relationships in the future anyway.”

But UK traders said last week it would take Motorola another six months to reassert its buoyancy in terms of its UK pricing.

One distributor said: “Most distributors have hardly touched Motorola UK stock in the past year because its pricing is all over the place. Why would anyone buy UK stock if they can get imported kit for 20 per cent less? It’s going to take it another six months to fix all its pricing.”

Motorola has struggled for profitability in the UK because of the instability of its pricing. 20:20, its largest UK customer, has been inclined to order stock at the end of a quarter, when the UK market has swelled with imported handsets already and UK pricing has been undermined.

“The UK business sits on a lot of UK stock because of all the grey market trading, and is forced to accept knockdown prices for it from 20:20 just so it can hit numbers,” said a source.

Another distributor said: “It can’t cut distributors off because it goes against EU free trade laws. Motorola will just starve these guys of stock instead, and deal with key customer accounts itself direct. But it can’t stop grey market stock entering the UK.”

 

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