Distributors dressed to make a killing

With the brouhaha surrounding the distribution sector's who's-buying-who saga reaching climactic proportions, the first clue was revealed last week, as IBM stalwart Avnet announced it was to acquire Sun stalwart Access.

Avnet was almost exclusively an IBM distributor, a rarity in this day and age, and a position in which most businesses can’t afford to be. When speaking with Avnet’s new EMEA president just weeks go, he told me that one of his aims was to grow the business – either through acquisition or by signing new vendors – both of which have been achieved with one fell swoop last week.

There are a number of reasons for Avnet to have made this move. Firstly, to simply carry one vendor and put all your eggs into one basket is an unsustainable business model. In order to show any growth, Avnet had to branch out to supplying other vendors’ products, something its VARs would have been calling out for.

But Big Blue also plays a part. After all, if the relationship was encouraging Avnet to grow by producing excellent margins and fantastic returns, then surely there would have been little reason for the distributor to branch out. But IBM, like most other vendors, has signed up a plethora of distribution partners and, consequently, margins have been trimmed as VARs hunt around for the best deal.

But it is unfortunate that Avnet has found it necessary – not just because of IBM’s over-distribution policy, but also by market pressures and conditions – to spread its wings. Operating with just one vendor allows a closer relationship and hopefully, therefore, better margins, as well as a single product range, culture and set of idiosyncrasies to get to grips with, and only one company’s promotions, marketing, training and sales programmes to qualify for.

But there is still no escaping the fact that by taking on board another vendor, sales and hopefully profit will see growth. VARs and end-users do not want just single-vendor solutions anymore; multi-vendor is the new black and with its latest acquisition Avnet is sure to be better dressed.