Becoming an OEM

DeltaXi1867

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Hello All,

So I am interested in become in OEM. I want to make small computers for personal use. Possibly eventually breaking into the business market.

What issues would you see with me doing this.

As many people here provide advice to people about computer purchases what could I do to make my systems more appealing for you to suggest.

Specs of the systems

In a very small form factor

Laptop Grade CPU
Celeron, i3, i5, i7

G.Skill
8-16gb ram

SSD Samsung 850 EVO
120Gb, 250Gb, 500Gb, 1TB

Intel Wireless AC 7265

Installed Windows 8.1( 10 when it comes out) Clean install absolutely no bloatware except one shortcut to a webpage where one can login to get access to all the information about their computer. I.E Windows License, Serial Numbers, Warranty information, etc.

The system prices range from $420 - $1170 before peripherals

Please give me some criticisms and reasons you would be concerned,





 
Solution
Warranty - Currently I have spoken with Microsoft and they will support any software issues and you can take the systems into the Microsoft Store or call them. This means my support is tied to Microsoft which I feel is best.
That's only the OS.

The manufacture provides a 3 year warranty and Ram and SSD's are longer so I can replace any pieces and then return them to the manufacture for a new or fixed unit. (Fixed units will go into refurbished units eventually)
Currently I have a hard drive RMA to Western Digital. 6 days so far.
If I were a customer of yours...
Ship to you.
1 day for you to diagnose
You send the drive off
It comes back (eventually)
Another day for you to put it back together
Ship to me
2-3 weeks?
Unless...

USAFRet

Titan
Moderator
Issues?
Warranty. How will you deal with the 3AM phone calls?

Competition with Walmart and BestBuy.

Why SFF? That limits what you or a buyer can later put in it.

Inventory. Will you have these systems already prebuilt, or do I have to give you money first, and then you order the parts and build it?

Business insurance.

There are other issues...
 

DeltaXi1867

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USAFRet

Warranty - Currently I have spoken with Microsoft and they will support any software issues and you can take the systems into the Microsoft Store or call them. This means my support is tied to Microsoft which I feel is best.

The manufacture provides a 3 year warranty and Ram and SSD's are longer so I can replace any pieces and then return them to the manufacture for a new or fixed unit. (Fixed units will go into refurbished units eventually)

I am doing a SFF because I will not be able to sell them to people who really know what they are doing because they can do exactly what I do. These are for people that would never upgrade a computer. This is for an everyday user someone not familiar with computers.

Inventory- I buy it and charge you when I ship to you. Similar to amazon. I believe starting time will be a ~10 day lead time from order to delivery although that will decrease if volume picks up as I will be able to maintain inventory.

Walmart and best buy will not give you system with SSD and 8gb of ram for ~$500 they also will not give you a clean install of windows especially not in a SFF. I am not saying my choices will be for everyone but I feel a group of people would be interested.

Business insurance - Definitely needed I would look into this.

Thank you for the topics!

Gam3r01
I am not going to do it cheaper but my pricing structure is ~MSRP of the parts+$50 for labor which is a pretty good deal. You could certainly do it yourself but not everyone can so you would not be my target market.
 

USAFRet

Titan
Moderator
Warranty - Currently I have spoken with Microsoft and they will support any software issues and you can take the systems into the Microsoft Store or call them. This means my support is tied to Microsoft which I feel is best.
That's only the OS.

The manufacture provides a 3 year warranty and Ram and SSD's are longer so I can replace any pieces and then return them to the manufacture for a new or fixed unit. (Fixed units will go into refurbished units eventually)
Currently I have a hard drive RMA to Western Digital. 6 days so far.
If I were a customer of yours...
Ship to you.
1 day for you to diagnose
You send the drive off
It comes back (eventually)
Another day for you to put it back together
Ship to me
2-3 weeks?
Unless you have a large inventory of spare parts to slap in....

I am doing a SFF because I will not be able to sell them to people who really know what they are doing because they can do exactly what I do. These are people that would never upgrade a computer. This is for an everyday user someone not familiar with computers.
Walmart and BestBuy are you competitors here.

Inventory- I buy it and charge you when I ship to you. Similar to amazon. I believe starting time will be a ~10 day lead time from order to delivery although that will decrease if volume picks up as I will be able to maintain inventory
$600 and 10 days vs $600 and 'today' at BestBuy.

Walmart and best buy will not give you system with SSD and 8gb of ram for ~$500 they also will not give you a clean install of windows especially not in a SFF. I am not saying my choices will be for everyone but I feel a group of people would be interested.
BestBuy, Dell, i3, 8GB RAM, 1TB HDD - $430
http://www.bestbuy.com/site/dell-inspiron-desktop-intel-core-i3-8gb-memory-1tb-hard-drive-black/2152046.p?id=1219530041654&skuId=2152046

BestBuy, HP Slimline, 8GB RAM, 1TB HDD - $410
http://www.bestbuy.com/site/hp-pavilion-slimline-desktop-intel-pentium-8gb-memory-1tb-hard-drive-gray/8448576.p?id=1219350960097&skuId=8448576

BestBuy, CyberPowerPC - Gamer Ultra Desktop - $499
http://www.bestbuy.com/site/cyberpowerpc-gamer-ultra-desktop-amd-fx-series-8gb-memory-500gb-hard-drive-black-blue/9177129.p?id=1218994544145&skuId=9177129

Yes, they are loaded with bloatware. That is one of the reasons for the price. Most people at the low end do not care.
No SSD....again...people buying cheap do not know or care. And for a LOT of people, 2 drives is too confusing. Heck..we see that in here...lol.


I applaud your initiative. But just know who your customers are, and who your competition is.
$600 and below, Walmart and BestBuy
$600 and above, Dell, Alienware, CyberPower, iBuyPower, self-build.


A better way forward is service. Fix PC's. Be better than GeekSquad (not hard). It is nigh impossible to compete on parts prices with the big boys.
 
Solution


You are not making anything. You are assembling other OEM's parts and reselling them. You would be a Value Added Reseller. Not trying to start an argument over semantics or anything & I don't claim to be an expert in this field. I just happen to work for an OEM and a VAR so the differences are more apparent to me, I guess.
 

DeltaXi1867

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That's only the OS.

Correct and the majority of issues are software related.


Currently I have a hard drive RMA to Western Digital. 6 days so far. If I were a customer of yours...Ship to you. 1 day for you to diagnoseYou send the drive offIt comes back (eventually)Another day for you to put it back together Ship to me-3 weeks? Unless you have a large inventory of spare parts to slap in....

Here I would have a few spare pieces as they are cheap laying about so it would be ship to me 2-3 days. I diagnose and replace the piece 1 day and ship back 2-3 days. Eventually I could also outsource this to UPS to make it even faster.

Walmart and BestBuy are you competitors here.
Agree.

Inventory- I buy it and charge you when I ship to you. Similar to amazon. I believe starting time will be a ~10 day lead time from order to delivery although that will decrease if volume picks up as I will be able to maintain inventory
$600 and 10 days vs $600 and 'today' at BestBuy.

My argument here is $600 10 days and a great experience (hopefully 5 days if it does well) or $600 dollars today and have a miserable experience. The problem here is education on what the difference in that experience is.

Yes, they are loaded with bloatware. That is one of the reasons for the price. Most people at the low end do not care.
No SSD....again...people buying cheap do not know or care. And for a LOT of people, 2 drives is too confusing. Heck..we see that in here...lol.

There will not be 2 drives it is one. One SSD so as to not be confusing. Yes this is expensive but it provides a better experience. Now this brings up the point why would any one want a 250GB SSD when the 1TB is bigger. This is education sell with all of the cloud services. I would say that it is not only a pain to have local storage your more likely to lose the data. So I also plan to promote cloud services for extra storage and suggest external hard drives if local is really necessary.

I applaud your initiative. But just know who your customers are, and who your competition is.
$600 and below, Walmart and BestBuy
$600 and above, Dell, Alienware, CyberPower, iBuyPower, self-build.

Agreed I just believe that PC customers deserve a better buying and owning experience. The difference between having a HDD and SSD is mind blowing.

The last question I would leave you with is if someone asked you what should they buy a Walmart computer or a computer with an SSD and 8gb of ram with a clean install of windows which would you suggest? I may not have all of the support 100% perfect yet but the product would be solid. Good products with good marketing sells and although you are probably right I think it is still worth a try.


These are all great points and things I have to think about thank you for bringing them up.
 

DeltaXi1867

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Skit75 - You may be right but when I asked the manufacture about it they said because I am re-branding and adding hardware I am an OEM. They may have told me wrong. It would be easier to be VAR (less rules) so I hope you are right I will continue to look into it.
 

DeltaXi1867

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Ya it is pretty small I figure with a deal on Windows Licenses and some small possible savings from MSRP. I would be lucky to make $100 a unit. Which would vary between 8.5-23% margin. Which I think is fine.
 
Unless you have a legal branding, under a business licence, you are not an OEM (For you, that might be easier).
You would need a business license for this, and if you ran it out of home your home could be taken as collateral if a lawsuit came up (For some reason, I cant think of any off the top)
 

g-unit1111

Titan
Moderator


The manufacturer needs to provide you replacement parts in order to be able to service rigs. And then there's the logistics of providing that service. I don't know where you are but I am in California. How would I handle a client's equipment repair in New York City? Or Orlando? Or Atlanta? That's one thing you need to ask yourself. You need to work with a shipping company like FedEx or UPS to be able to provide cheap or free shipping to your location so that way customers can send PCs to and from your location for repairs if needed.

My argument here is $600 10 days and a great experience (hopefully 5 days if it does well) or $600 dollars today and have a miserable experience. The problem here is education on what the difference in that experience is.

So if I'm a business and I'm setting up a thin client network connecting to a central server, how do I get those systems fast? Why would I go to a place with a 10 day lead time when the next guy will provide systems with a 5 day lead time?
 

USAFRet

Titan
Moderator


At the low end of PC use, not as much as you might think
I just swapped my wife's PC from a 2.5" 250GB 5400 ex-laptop HDD to a brand new 250GB Samsung EVO.
"Yeah, it's a little bit faster..." If I hadn't told her, she might not have noticed.

I agree with you that an SSD is WAY better than an HDD. All of my current main PC's here have an SSD as the main drive, my main PC has 3.
But for the 'only' drive, SSD is still pretty expensive.
 
Also, you should be aware of the competition online within eBay. Not everything is used there. There are tons of VARs already doing exactly this with Used and New equipment that don't have the big online names mentioned above. There are thousands, literally, and a lot are using software to undercut each other and bid on new listings for parts. It is dog eat dog. I can post a Cisco 48 port switch on my eBay store and I will receive a dozen "robo" offers within the first minute of the listing.

One guy changes his list price manually and you will see other listings change(not yours) because you tried to undercut a guy who is using price watch monitoring software to immediately undercut you back.

I'm not trying to talk you out of your idea and you seem to be receptive of the constructive criticism. I think you really should do some more digging and identify your true competition and who really is your customer. If you don't offer Free shipping, someone else will. You eat this cost and even with a business discount from Fed-X or UPS, shipping is expensive. Find more value to pad into the profit margin of delivered product so you can offset this. Maybe partner with your cloud guy first and see what he is willing to offer you for delivering customers to his service etc...
 

DeltaXi1867

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Great question. I will keep a stock of pieces to be able to service rigs so the repair and send back time is far less I would say just shipping time.

As for picking someone with a faster lead time I have nothing for you except my lead time would be better if I had more sales. Chicken and the egg situation which if I felt I was losing lots of sales to lead time I would invest more money in inventory to capture those sales.
 

DeltaXi1867

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If I sold a unit across state borders then I would trademark the branding. I would also have a business licenses as an S-Corp which would greatly limit any personal liability not to say business insurance would be unnecessary.
I would be running this out of an apartment and eventually I would rent space hopefully which I do not think they could take as collateral but good point none the less.
 

g-unit1111

Titan
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I don't think more inventory would solve that problem. Having a staff that can assemble those systems into working machines faster while providing quick quality inspection would, in my opinion, be a bigger factor in solving that problem.
 

DeltaXi1867

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Good point I did not plan to post to e-bay part of my idea is to have simple buying experience which I plan to do on my online store. I will not be using e-bay as I will have my own e-commerce site and may sell on Amazon as well until I felt that it was not necessary and could solely sell on my site.
 

USAFRet

Titan
Moderator


$100/unit.
How much will you spend on each unit for that sale?
Ordering
Building
Customer acquisition/retention
Warranty
Packaging and Shipping
Advertising
Legal

You may find you're getting below minimum wage overall.

And at the low end of your price range, $100 extra = no sale.
 


You would still want an eBay store.... believe me! Let the customer find you where EVERYONE ELSE looks first. You can funnel them to your e-commerce site via links of the product. It would be a waste to not make your product searchable in eBay.
 

DeltaXi1867

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Good points I need to think about the cost of those things. Some of them I have worked into the price. I will continue to think it over. Thanks for all the feedback really hard to get some one to bring up real issues seems like everyone in real life is so nice that they refuse to bring up things that need to be worked out before you can move forward.
 

DeltaXi1867

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Definitely agree with that will do!
 

g-unit1111

Titan
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The one thing people don't teach about prices is that it's not a guessing game. There's an exact science to figuring out how much a product costs. Manufacturers set one price, but the stores set another for their inventory. You have to figure two things: cost of goods manufactured and cost of goods sold. Once you figure out those things you've got the costs needed to figure out how much inventory you need to move.