Distributors need to take a risk

I hate to repeat myself, but this week the distribution channel has been in the firing line yet again.

Most of the major vendors appear to have had a distribution shuffle: Oracle axed two partners, Sphinx and Open PSL, and appointed Clarity Technology; Acer ended its relationship with Midwich and signed Micro-P and VIP; and Hewlett-Packard is apparently looking at modifying its distributor Ts&Cs in November (CRN, 11 September).

Of course, it is good policy for vendors to review channel relationships every year or so, simply to check that support is being given correctly, sales are being made and markets are being developed.

The problem for distributors is that everyone wants a piece of them and are demanding more and more for less. This cannot continue.

This is why one distributor has to take the risk and attempt to venture into a brave new world of distribution. Prices, and consequently margins, have to go up and the only justification for this can be that service levels also have to rise. But it will take one brave distributor, more than likely currently operating an unsustainable strategy, who dares to change its business model.

If distribution increases its prices to resellers, there will inevitably be some furore surrounding the move. But if service, support and supply levels are increased at a similar rate, then most resellers would be willing to pay that little bit extra.

But VARs that have already developed their own in-house services will also need a tempting reason to pay more. High-quality lead generation and real marketing support could be the answer. Creating new business and helping to develop that new business with the reseller is sure to attract a crowd of interested resellers.

Despite what some in the channel think, most VARs are not simply after the lowest price. And with distribution currently operating on unsustainable margins, there may be little choice but to take a deep breath and take the risk. After all, fortune favours the brave.