On at least one demonstration video so far, PCTV has sold part of the airtime to the manufacturer of the product involved, who uses it to talk up some of its other products, just like on commercial TV. Until recently, a vendor-reseller relationship as cozy as that was as unlikely as a Tyson-Givens wedding anniversary. Indeed, from its inception in the late '70s, computer-equipment mail order was well out of the mainstream, and manufacturers aimed to pin it there by refusing to let mail-order houses carry their wares, ostensibly on the grounds that sellers by mail couldn't provide aftermarket technical support. However, Hall observes, the moral high road didn't stop some manufacturers from stooping to buy stuff for themselves at discount. "Mail order is sleazy," they would preach, and in an aside to PCC would add, "but can you give us a good price on a hard drive?"
How times -- and the exigencies of the market -- have changed. As late as 1987, Lotus Development deauthorized any dealer caught leeching out Lotus products to mail-order aspirants like Gallup and Hall. PCC wasn't fully authorized to carry Lotus products until early '89. (Previously, PCC had to get its Lotus products from gray-market dealers, who turned them over at a few dollars' profit.) By the end of '88, however, Lotus and PCC were chummily working out co-op advertising agreements.
Thanks in part to its indescribable buying power (PCC accounts for "several percentage points" of giant Microsoft's domestic software and peripheral equipment sales, Hall hints), the company has been able to pressure hard-nosed manufacturers such as Lotus to drop copy protection from their software and to ameliorate vendors' cruel insistence that goods be bought in quantity rather than as needed by merchants struggling to balance inventory against cash flow. And it was at PCC's not-too-subtle suggestion (any company that refused would be banned from its latest MacConnection catalog) that a considerable number of previously reluctant manufacturers were inspired to back their products with their own money-back, no-questions-asked guarantees.
But perhaps the best testament to the solidity of PCC's place on the mail-order map is that vendors now trek all the way to Marlow to peddle their lines. Gallup and Hall are preparing eight rooms in the inn for reps to bunk in -- including any who may have spurned them in the past.
The reason PCC grew so fast with no outside investment, Hall claims demurely, is that "selling microcomputer peripherals was so easy it was like a black hole -- you could throw any product in, and buyers would make it disappear." Yet other stars in the mail-order universe were favored by the same phenomenon, and they disappeared instead -- this in an industry sector estimated to have grown from $1.5 billion in 1986 to $2 billion in 1989. Nor are any more competitors likely to crop up. When Gallup and Hall began in '82 with a ninth-of-a-page ad, a full page in a computer magazine cost but $1,000. Seven years later, in 1989, the same full-page ad costs $19,000, and PCC runs up to eight pages at a crack in several each month.
Despite its already giddy ascent, PCC could be climbing yet higher, given more space, time, and people. A couple of years ago PCC sold high-ticket computer systems as well as peripherals, and wasn't doing a bad job of it until -- on a minor technicality -- the FCC banned some PC clones, including PCC's house brand, from the market. Hall never bothered going back into CPUs, all else being equal?. "But I could," he warns anyone watching anxiously for a downtick, "if things started to slow." That's not happening just yet, it seems. In February 1989 PCC broke ground for a 120,000-square-foot facility -- the most significant industrial construction in Marlow since the sawmill in 1819.
Would-be competitors also must face up to the fact that not only do PCC's vendor contracts protect it from getting caught with a surplus of a product when an updated version is released, but it can buy a vendor's overstock advantageously because of its ability to jump into a volume deal with fast cash. When one manufacturer recently put a large quantity of a certain piece of software on the block at a bargain price, PCC plunked down several hundred thousand dollars for the entire lot, cornering an unbeatable retail price for months to come. And it earns the lowest fee schedules on credit-card charges, having driven the rate down by sheer sales volume. (Hall still stubbornly resists using American Express, because Amex still stubbornly resists lowering its rate.)
As formidable a volume shopper as PCC has come to be among manufacturers and distributors, its margin schedules do not necessarily dictate best buys for customers. Some intrepid competitors have tried to compete solely on price -- an arena where PCC may be vulnerable -- but without measurable success. (Indeed, two of PCC's staunchest competitors, both we'll-beat-any-price merchandisers, went under last year). That's because PCC's solid reputation turns its occasionally higher pricing structure into advantage. "There have been items we've gotten really good terms on," admits Gallup, "but we've never gone strictly on price; it's always because it's something we think people would want to use." For PCC repeaters, it's evidently worth a few more dollars now and again not to have to ask themselves after they get it, why was PCC selling this awful thing?
In lieu of rock-bottom prices, other thoughtful concessions are aimed at buyer fancies beyond the coffee mugs and pocketknives that PCC gives for customer constancy. For one, Hall dislikes nickel-and-dime add-ons, such as mail order's hoary "handling" charge; not only does PCC not tack them on, but if someone telephones in an order for an item that is quickly found and easily shipped -- a replacement knob, for instance -- it's postaged and handled gratis.
PCC's payment to many of its vendors is one day net. Not because the company hadn't been discharging credit obligations, says Gallup, "but because it's good for us. Sometimes manufacturers can't keep up with demand for products, and we're making sure we're on the top of their list. We want them to ship to us right away because they know they're going to get their money right away." To accommodate customers should a product be out of stock for a short time, PCC writes the invoice at the current price. Should that price be lowered when the new lot comes in, policy dictates that the difference be automatically refunded. Even if the amount is as scant as a cent, the computer dutifully disgorges a check. "The bank thinks we're nuts," admits Hall, "but I see it as cheap advertising."
