Distribution debate: Question two

More than just a sales network

As a small but sophisticated vendor of IT security software, Devicelock relies on its first tier partners including distributors and value added distributors for their knowledge of the market place and their own reseller networks, especially in the regions where we do not have local offices and experience. The primary value they offer is therefore in providing an immediately available channel through which we can target our customers. Building a channel infrastructure of a similar size internally would usually require significant investment of time and resources. Our partners also support us by providing pre-sales support for their own resellers for example technical demos, consulting and test installations etc to our prospects. This brings me on to the third and most valuable benefit that our partners provide which is frontline technical support for our customers, thus saving the time and man-power of DeviceLock's own technical support departments. It is also worth noting the support distributors provide in simplifying business processes such as ordering and invoicing and in product marketing by participating and often leading in regional and national PR and marketing activities which we often share the cost of.

Posted by Sacha Chahrvin, DeviceLock | 29 Oct 2010

Value Add

Distributors have taken over the role of "trusted advisors" both with the resellers and their customers. The question should be " Is the Reseller channel providing a real serivice?"

Distributors don't just supply products. If they do their job properly,they provide knowledge, expertise and, ullimately, finance.There is an awful lot of risk here which I don't believe would ever be taken on board by "the channel"

Posted by Thomas Evans-Argent | 28 Oct 2010

Not all distributors are equal

Not all distributors are equal in terms of their partnership with vendors and more importantly the 'value-add' service they provide to resellers and solution providers.

At Novell, we look for distributors that are: a) recognised in their local markets as trusted business partners - i.e. reliable service levels, credit worthy and ethical business practices, b) have demonstrated competencies and skills to sell and support our latest technologies, c) have a track record of properly supporting and enabling our shared partner ecosystem and d) the agility to shift resources and investment to support our customers and partners business priorities...and of course Novell's solutions to solve those priorities.

When it comes to "value add" distributors our policy starts with "less is more". Our partners are looking for simplicity and focus. We build on that focus by investing in competent, value add distributors who are prepared to prioritise an investment that supports our business solutions for customers and for our authorised ecosystem of partners. This priority and focus, as opposed to a mass market broad-line approach, offers the greatest benefits to our customers and partners.

Posted by Dan Veitkus, Novell | 21 Sep 2010

Distributors are an essential link in the channel supply chain, however it is easy for proactive opportunities to be missed

Distributors are an essential link in the channel supply chain and are key when it comes to dealing with day-to-day queries that vendors would otherwise not have the capacity to field, not to mention the required ability to manage stock supplies. The fact that the 6,000 odd resellers out there are still trading proves that the distributors are doing a good job.

However, it is easy for a proactive opportunity to be missed. Distributors need to remember that they are in an enviable position in the visibility they have of vendors? plans, and also the firsthand grasp on what resellers are buying and selling. We would advise any distributors out there to make the most of this insight by taking a step back to monitor buying patterns and needs, to recognise where up-sell opportunities are, for the taking. This will further bridge the relationship between vendors and the rest of the food chain and allow them to be more proactive and innovative in the way they can broaden their offering, by bringing additional support and service to those up and down the channel. Most importantly, it will drive home those sales for all in question.

Posted by Paul Callow, ISD & Channel Director, Lexmark UK | 20 Sep 2010

Distribution adds significant value if it can communicate with its target audience successfully

In a fast moving and ever changing marketplace such as IT , communication is crucial , and it is the level of communication from distribution to the Channel that vendors truly put a value on .
Yes , niche distribution has to be able to deliver the right product ,at the right price , at the right time , in the same way that a broadline distributor does , and all of these simple tasks have a value ( albeit an ever decreasing value ) but that only happens once a user has made a decision to purchase , and that decision could be after days/weeks/months of communication between the buyer and seller .
Getting the vendors message through the Channel to the target audience is where focused distributors add value .
If a distributor has a record of bringing relevant and current products/technology to the market , resellers learn to trust that distributors grasp of this ever changing marketplace and will take heed of future product recommendations .
Successful vendors with existing distributors in the UK make the most of this relationship and vendors who are new to the UK market almost always want to tap into this channel relationship . Getech are in the enviable position of seeing emerging technologies become mainstream and can pick and choose ( to a certain extent ) which vendors we represent . All too often we are approached by new vendors who want to enter the UK market , and use our reseller database our sales and marketing staff to launch their offering , without it seems a long term marketing plan or market development strategy , it is almost as if they have to put a tick in the box to confirm they have a UK distributor , Getech choose to work only with Vendors who see market development as a joint commitment.
A distributor who provides the logistics , credit , storage as well as being able to successfully communicate with his reseller customers is in my mind absolutely adding value .

Posted by Guy Watts , Sales Director , Getech Ltd | 20 Sep 2010

Good relationships create value

Ensuring that a distributor is adding value to the supply chain is as much about the vendor as it is about the distributer. A valuable supply chain is one that works together with common values, and goals. When TP-LINK, the leading SOHO networking device manufacturer, entered the UK market we attached great importance in selecting distributers who could work within the values of the brand?s strong customer service and value ethics. The aim was to balance distributors by location, customer structure and SKU?s to reduce channel conflicts and achieve long term benefits for all partners.

We placed a priority on effectively communicating our objectives directly to our distributors, and as a result, they have helped the company to develop its business by introducing TP-LINK to channel activities in the UK and offering solid support to our sales and marketing goals. TP-LINK has now established its first office and warehouse in the UK and distributors remain key to our future growth in this market.

Posted by Eric Wang, Country Manager of TP-LINK UK | 16 Sep 2010

Distributors Remain a Powerful Asset

In the IT industry, most distributors are specialists and provide valuable support and expertise, so the right distributor is a powerful asset that perfectly augments the qualities that vendors and VARs bring to the table. In these times of austerity they can also help in taking some of the capital expenditure load from vendors and negate the need to hire internal support staff and sales engineers. Because of this, distributors are becoming 'partners' in the truest sense of the word to forward thinking vendors

Posted by Michael Gomez, European Channel Sales Director, Courion | 16 Sep 2010

To add value you have to truly understand the needs of the channel

Value means different things to different people and cannot be determined by a single set of parameters. The criteria by which Business Partners and Suppliers determine value depends on who they are and their short and long term needs. But in general, successful distributors are those who listen to and understand the Suppliers and Business Partners they serve. In short this means extending market reach, collaborating to deliver solutions, providing financial security and investing in resources, programs and services that achieve growth. Delivering logistics excellence needs to be a given.

All the time Suppliers choose to 'outsource' the supply chain, channel support and sales development functions there will always be a place for distribution. Suppliers and Business Partners vote with their feet and distributors who only partner their strengths with the perceived needs of their Suppliers and Partners are at risk and will struggle to justify their position as the channel evolves. Whilst distributors who listen to the true needs of their partners to provide the resources and support really required will continue to prosper and help grow the Channel.

Posted by John Toal, UK Country Manager, Avnet | 15 Sep 2010

Unsung Heroes

Often, the value added distributor (VAD) is the unsung hero by taking on many of the tasks that quite frankly vendors can't, won't or don't want to do and by providing specific knowledge and expertise to the reseller that the vendor would struggle to provide itself. Value-add comes in all shapes and sizes and can mean different things to different individuals or organisations. For some, added value is providing credit and having the right product in stock, for others access to sales, marketing or technical resource makes the difference. Often it's about a specific partnership that one company holds with another that's of greater value.

The mould of the VAD is evolving and distributors need to be more innovative and entrepreneurial to compensate for resellers' caution since the latest market downturn began. If a reseller can't see an immediate return on investment they are far less likely to consider moving into new technology areas. VADs, however, can support resellers in this process by taking a lot of the risk and 'cost of entry' away - embracing cloud computing is one way of doing this - and by pushing the boundaries of what is seen as traditional value-added distribution towards the next generation of distribution.

From a geographical perspective, the channel and vendor can utilise a VAD's infrastructure to deliver, manage and support multi-national projects, removing the need of having to invest internally. This will significantly increase channel opportunities and revenue levels as end users look to consolidate their supply chains in an increasingly global market.

VADs can also assist resellers by delivering market knowledge and experience. The birds eye view that distributors have of a market means they are far more likely to spot trends or opportunities which their resellers can capitalise on; it is this knowledge that will often differentiate the good from the average supplier.

So yes, without doubt some distributors certainly are justifying their place in the supply chain.

Posted by David Caughtry, director of core technology, COMPUTERLINKS | 15 Sep 2010

Distribution debate

Look back ten years or so to a description of a Distributor and it will be vastly different to one today. These changes are driven by market forces but predominantly declining margins. They remain nonetheless core and crucial to the supply chain and are forced to evolve. The differentiator between VAD and VAR is now waifer thin, limited only perhaps to inventory holding and credit, both areas of specialization in Distribution but where both crucially, can be painful if badly managed.
I recall the days of Broadliner and Specialist Distributor. We now talk of theValue Add Distributor. How long perhaps before we see the Managed Services Distributor or Solutions and Services Distributor? Not long I'll wager given continuing margin pressure and the need to differentiate and stay on top. While the word Distributor will remain in the title, it will carry less meaning in the context of what it delivers. They nonetheless remain pivotal to the channel.

Posted by Edward Pacey | 15 Sep 2010

Adding value at Widget UK Ltd

As a specialist distributor at the smaller end of the scale, Widget has had to work hard to create added value for our partners, and reach beyond the traditional distributor role.

Widget has a wealth of vendor experience at senior management level, and has used this to develop a complete go to market service, particularly to new vendors in the UK market or existing UK vendors who are underperforming in key channels.

In addition to providing service, credit and delivery to our customers, we have created strong electronic links with both customers and vendors to distribute management information, and innovative marketing programmes to help sell through at all levels.

Posted by Jo Foreman and Mark Needham, Widget UK Ltd | 13 Sep 2010

Distributors offer value and experience

The greatest value a distributor has to add comes from two related factors: relationships and experience, each of which makes them an indispensable bridge between vendors and resellers.

Distributors are established authorities in their particular field, with their most experienced staff having unrivalled insight into and relations with resellers. Thanks to this, distributors can pass their wealth of experience and knowledge about vendors and their markets on to resellers more effectively than vendors ever could.

Furthermore a vendor will never be able to effectively and quickly form a meaningful relationship with every single reseller that stocks its product, nor will it ever be able to develop the insight to know exactly what every single reseller needs to make the most of their business. Vendors must recognise this fact, and make sure that they are both listening to distributors and helping them give the best possible service to their resellers.

If this advice is followed, vendors will save huge amounts of time and effort. Resources that would otherwise be spent fruitlessly trying to connect with resellers can then be invested in joint marketing programmes, as well as other initiatives designed to help distributors and their reseller partners. While distributors also offer an economy of scale and simplified supply lines to vendors, the core value of experience and relationships should never be discounted.

Posted by Chris Davies, D-Link UK & Ireland | 13 Sep 2010

Westcoast Resilience

IT Distribution has never been more cost effective and never more required. The General Trade Dsitribution Council recently ran a study showing the costs of IT distribution were lower than any other distribution model in any other industry. Maybe I would say this, but how many times have the press predicted the end of distribution only for distributors across the world to adapt to cost pressure and survive and thrive. The proof of the pudding is distributor's resilience. None more so than Westcoast who have thrived proudly as an independent company for 26 years.

As someone who has worked in the channel for 20 years and have heard that distribution is a necessary evil for that long! It is surprising how many stick with distribution as opposed to choosing the option of a direct model - just ask Dell resellers.

Distributors will inevitably consolidate as they strive for further economies of scale and niche players will still be able to carve out a place for themselves for many years to come.

Westcoast is no exception

Posted by Alex Tatham | 13 Sep 2010

Are distributors adding enough value to justify their place in the supply chain?

Clearly distributors play a valuable role in some business models, particularly where there is a physical product to ship or where companies do not have a direct presence in a specific geographical location. However, the vast majority of Sophos's business is purely software based and therefore most customers download our products directly online. As a result, we only need to work with distributors in a very small number of geographical locations where traditionally we have not had a direct presence.

Sophos has a 100% channel business and works very closely with its partner base, providing them with direct access to account management, pro-services and support staff on site. We believe that the level of closeness between vendor and partner is directly reflected in the consistency of service and added value - and therefore overall customer experience - that the partner can deliver the customer. The right channel strategy and a close relationship with partners is therefore a key factor in delivering fantastic growth.

Posted by Ciaran Rafferty, Sophos VP UK & Ireland | 13 Sep 2010

There's opportunity for all....

...providing of course that each Distributor is very clear about their role and where their strengths lay. Distribution in the UK has significantly helped Check Point in growing our business over the last decade.
In all of this we shouldn't lose site of the customer. In all but the smallest of organisations there are a number of individual customers to be marketed to, often serviced by resellers with specific skills and competency. It follows that 'Value Add Distributors' may be able to address focus areas therefore better than the larger ones. In short whilst the larger Distributors can offer significant advantage it may be that the more focussed may help with more specific opportunity. A vendor needs to understand their proposition to end customers and determine the most appropriate type or mix of partners to facilitate this. Then and only then can we as Vendors determine ann appropriate model.

Posted by Terry Greer-King | 09 Sep 2010

Good value add distributors are growing, not shrinking!

In my experience, yes, distributors add a lot of value. For companies looking to cost effectively and quickly break into new markets, distribution still remains one of the easiest ways of doing so. The distributors we're working with are actually growing in terms of revenue and not shrinking. The market is however, forcing distributors to build even more value add to their vendors and resellers, simply being able to sort import duties and logistics is no longer enough.

The distributors that will continue to succeed and flourish are those who have understood this paradigm shift in their market role, and who can actively build demand for their vendor and re-seller partners i.e. a VAD - value added distributor.

Posted by Mike Heredia, Northern Europe Sales Manager, LogLogic | 09 Sep 2010

Don't miss out on service

The answer to this question depends on both the service provided by the distributor and the product or service being offered. For example, where the distributor is focused on vertical markets their value is likely to result in both increased access and greater market penetration. The value of the distributer is therefore extremely significant.

Where the product or service is standardised, the value- add is dependent on the level of service provided. For example a distributer can provide value by offering a local presence, providing improved response times and relating to local culture.

Distribution channels are crucial to our continued business growth. However the success will ultimately depend on the technology that is provided, the service offered and the resulting customer satisfaction levels.

Clients today are not only interested in the product they are being offered but all the additional elements of service that they receive; from access to appropriately trained and qualified staff, to the advice and help they receive, the manner in which they are dealt with, to flexible contracts, payment terms, SLA?s that are adhered to and transparent billing to name but a few. It all comes down to providing customers with what they need in a way that supports their business.

In order to be able to focus on providing this level of service, resellers would be advised to work with a service provider who matches this ethos and invests wholly in supporting its partners. From a portal that includes deal registration, to online tool kits and a partner-training program, access to help and support, resellers should demand a first-class service so they can pass this onto their customers.

Posted by Amanda Dunn, Channel Manager EAME, PEER 1 Hosting. | 08 Sep 2010

Distributor in the next decade

There's a lot of speculation about the role the distributor will play in the next decade. Acronis works with distributors across the world, and it's clear they are not resting on their laurels and waiting to see what the 21st Century will bring. Instead, they're paying close attention to trends including virtualisation and cloud computing, and preparing their businesses to serve vendors and resellers even more efficiently.

Rather than seeing the death of distributors, I believe that those who embrace the advancement in information technology and are able to offer solutions to match the hybrid world including physical, virtual and cloud environments, will be the ones that are much more aggressive and efficient in receiving orders from resellers and attracting more suppliers. It is this breed of distributors that will continue to play an important part in Acronis' ongoing commitment to enhancing its customers' satisfaction.

Posted by David Blackman, General Manager, Northern Europe, Acronis | 08 Sep 2010

Sheds on wheels

Broadliners and value adding are a complete and utter paradox. When market demand is high and competition intense, services in the form of price, availability, and delivery, are not exactly disruptive, high margin attributes. In fact I've often wondered why DHL and UPS don't develop their own technology wholesale businesses!

The definition of adding value is providing something you have that your competitors lack - yet want and need, like engineering, second line support centres, demand creation funds and so on. But with low margins and increasing competition are broadliners really investing in these sought after assets?

The only real value I see these big broadliners bringing at the moment is credit holidays. Vendors, especially those governed by Sarbanes-Oxley and other regulatory compliance, are overseen so tightly on revenue recognition that getting more than 30 days credit is very tough. However, some of the bigger distributors are able to offer terms to resellers over and above the norm and, therefore, help VARs with cash flow etc. This, at a time of squeezed margins and slower payments from end users, is probably the biggest value tool in the broadliners bag right now.

Posted by Barrie Desmond at VADition | 08 Sep 2010

How would you replace them?

Without Distribution who would manage credit lines, provide next day shipments or generate 1000's of solution specs and quotations per day?

I think most reasonable Vendor and Channel Leaders recognise this. However, many of their colleagues do not, and are guilty of expecting something for nothing.
Distributors are played off against each other every day by both Vendors and Resellers and any value that they can add is being squeezed out. Few Distributors can afford to invest heavily in pre-sales and marketing and I think that the whole channel suffers as a result.
It's hard to invest in future business development when your continued existence relies largely on succesfully receiving a vendor rebate 3-6 months after quarter end. Most rebate targets are set unilaterally and with little science applied.

I spent a few hours sat with an internal Distribution salesperson recently. He managed 10 well known resellers and at least half of the enquiries he handled were caused by a lack of value being added by the Reseller or Vendor. If Distribution were to vanish, all of this work would still need to be done and the cost of doing so would be felt elsewhere.

It would also be very unwise to ignore the credit lines held by Distributors. Many well known resellers and possibly vendors wouldn't be around for long if this value-add stopped.

As I said earlier, most reasonable leaders understand these things. Education and leadership is needed to ensure that their staff also see the value of this critical part of the supply chain.

Posted by Antony Young | 06 Sep 2010