Broker hopes luck will turn

By PETER GRIFFIN

Computer entrepreneur Mark Mahony is again dabbling in PC sales, through online venture Brands Direct.

The business operates through its website www.brandsdirect.co.nz and describes itself as a "product broker", advertising tech products from laptops and digital cameras to mobile phones and software.

While there is nothing to suggest Mahony's latest venture is anything but legitimate, consumers should always ask questions before handing over cash for PCs.

Mahony's last two PC ventures, Cost Club and Best Buy, both collapsed, collectively leaving business partners and consumers over $1 million out of pocket.

Brands Direct does not actually exist as a registered company, but is managed though Web Holdings, of which Mahony is a director.


He was director of Cost Club, a PC retailer that collapsed in 1996.

Buying up the assets of Cost Club, Mahony went on to form a similar operation called Best Buy. Despite massive growth that saw Best Buy's revenue grow to around $10 million in its first 10 months of business, Best Buy also fell over owing creditors - including computer vendors and consumers - hundreds of thousands of dollars more.

As Best Buy collapsed, dozens of angry consumers who had already paid for computers turned up at the company's premises.

The collapse of the two companies sparked a frenzy of legal action and in the case of Cost Club, an investigation by the Auckland Police fraud squad.

No charges were ever laid.

Mahony, however, continued in business. He has never been listed bankrupt.

Out of pocket to the tune of $450,000 in the Best Buy collapse was PC industry figure Colin Brown, who recovered from the loss to form The PC Company.

Ironically, The PC Company itself collapsed last year leaving unsecured creditors in the lurch.

Its receiver, Kim Thompson, said in December that unsecured creditors were owed around $2 million and had "little likelihood" of being repaid.

That despite The PC Company racking up annual revenue of around $60 million. It was a sign that even the biggest of the local PC sellers could topple.

Mahony did not respond to Herald inquiries, but long-time friend John Wilson said Mahony was still a director of Web Holdings but was no longer operationally involved in running Brands Direct due to health problems.

Wilson runs Brands Direct, is the sole shareholder in Web Holdings and was the second-largest shareholder in Cost Club when the company folded.

He pointed out that Brands Direct did not hold stock, instead placing orders with suppliers Tech Pacific and Ingram Micro as customer orders came in.

"We never commit to inventory. That's how you stay a broker," he said.

Instead the company built databases of potential customers and marketed to them with mass mail-outs and fax drops.

It was a way of "cutting out the middle man", said Wilson.

Brands Direct filled a niche market that was growing fast, he added.

"There's still a natural aversion to shopping online."

Asked how much faith a consumer could place in a local PC seller, Wilson said: "They're all branded products - as long as you trust the provider."

Brands Direct sells mainstream brands which are covered automatically by manufacturers' warranties.

It also sells warranty extensions.

But most PC sellers operate on a cash before delivery basis.

Consumers can still be left out of pocket if a company collapses in the period before a paid-for PC is delivered.

And protection for PC buyers took a blow last month when the Computer Manufacturers Association (CMANZ) wound up its warranty assurance programme.

It blamed falling membership and the cost of covering warranties of customers with The PC Company computers for the scheme's demise.

PCs sold before April 1 this year will still be covered by the warranty scheme, said CMANZ.

Online vendors of computing hardware and software have proliferated, often bettering the pricing of the major retailers.

A good website to browse local sellers is www.pricespy.co.nz which lists around 130 technology sellers.

In the end, the same rules of prudence apply online - you need to trust your PC supplier and, if necessary, make checks before parting with your money.

Buyer beware: playing it safe on PC purchases

* Always pay by credit card - Your transaction is recorded with the major credit card companies and banks. It may even be possible to reverse a transaction.

* Run a credit check with Baycorp Advantage - If in doubt, find out if the company has been paying its bills. A company report through Baycorp Advantage is available online for $12.

* Be insistent on delivery times - If they promise to deliver by courier overnight, demand action if they do not.

* Keep all of the paperwork - receipts, warranty cards, company letters. They are your proof of purchase if anything goes wrong.

* If you have lingering doubts, go elsewhere. Too many Kiwi PC buyers have been left out of pocket.