There are approximately 1,750 stores and businesses for the sale and service of personal computers.
- Personal computer stores are active as independent stores or as part of a chain. Additional computer sales take place at appliance stores, office supply chains, and even at consumer goods stores.
- Online computer sales are developing rapidly.
- Personal computer and computer networks are fast-changing markets. Quick obsolescence of equipment is accompanied by a drastic price decrease on computers and existing supplementary equipment.
Customers: Defining the Target Market and its Size, Market segmenting
- Private customers purchasing a computer for home use.
- Business customers- ranging from small to medium sized businesses.
- Large establishment customers- this group usually makes large acquisitions by way of a tender or a large, known vendor.
Competition in the industry is plentiful and stems from a number of main factors:
- Computer companies and chains
- Computer stores
- Consumer goods and office supply chains.
- In the service department, computer technicians
The personal computer market is based on computers and computer component imports. Importers and vendors are abundant, and there is no dependence on any single vendor.
Advertisement in local or national print, sales persons, shop-window design and sign display, discount sale events, offers of supplementary services and benefits such as courses, computer guidebooks and CD-ROMs, internet sites for online sale, advertisement in specialty magazines, use of promotional materials, participation in corporation and large establishment tenders, reputation, and recommendations by satisfied customers.
Internet sales are expected to increase, bringing forth relative advantages in price and standardization.
Factors Affecting Success:
- Prices are a major assessment factor in the decision to purchase.
- Smart inventory management
- Service, professionalism, and reputation.
Industry entrance threshold is low. The industry does not require any kind of professional qualification. Barriers include: professional knowledge, associations in the industry, the cost of establishing a store, employee recruit, and financial back up in order to qualify for customer credit conditions and operating capital needs.
A professional on the subject of computers, hardware, software, accessories, etc. must be present. At a small store with no a service department, the store manager can handle both purchase and sales. If computers are assembled at the store, one technician is required for every 20 computers. In addition, a clerk is required at all business hours. A store with repair and maintenance services requires a technician per each 50-75000 NIS of sales, and additional human resources according to operation requirements.
Furniture, cash register (and/or computer- including inventory management), phone and fax, computers for demonstration of software and capabilities. Lab equipment and parts are required if a lab is operated.
A vehicle is required if installations are conducted at the customer’s site or for use by service technician.
Store remodeling, initial inventory and equipment as noted above. Vehicle may be leased instead of purchased.
Industry revenue and profitability
Percentage of raw profit that stems from major types of activity is presented below:
- PC sales- 13-59% in large cities, 15-20% in provincial areas.
- Computer component sales- 15-22% in large cities, 17-23% in provincial areas.
- Computer upgrades- 18-27% in large cities (at stores employing more than 3 technicians, raw profit will be in the range of 33-38%), 20-27% in provincial areas.
- Small accessory sales- 25-30% in large cities, 24-40% in provincial areas.
- Large accessory sales- 11-20% in large cities, 34-40% in provincial areas.
- Sales of office shelf software 12-18%.
- Sales of games, educational software and professional literature- 30-35% (based on economic guidelines of commissionership of income tax authorities)
Risk level in the industry is relatively high, especially due to the vast competition and relatively low raw profit.
Licenses and Certifications:
At a store where inventory is valued higher than 200 thousand NIS, or a service lab with an area of at least 25 square meters, a business license from local authorities is required.
Business insurance (for content and inventory), third party insurance, employer’s liability insurance, insurance for merchandise in transit, and loss of income insurance. In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.
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