Simon Meredith: Business with the personal touch

It's been a difficult year for distributors. Many have seen their profits and share values falling. Earlier this month, we saw Wayne Channon, long-standing boss of Ilion, stand down. Ideal Hardware has revamped its operations after seeing profit and shares take a dive. Datrontech has also found the going tough. There have been changes at Ingram Micro and senior arrivals and departures at Computer 2000. All the leading broadliners have struggled to make money.

It's an over-supplied market that has too many distributors, who are also worrying about what is going on in their own lives instead of focusing on the people who really matter - the customers.

They have had to watch the corporate volume products market slowly dry up as direct sales, licensing, catalogues and big hybrid dealers soak up the business. This has left them with the super-competitive and volume markets - printers, networking, monitors and storage. Tough sectors.

Now they are trying to attack the SME space and cut costs at the same time. Some are doing this with e-commerce and others with telesales operations.

This is taking huge investment, but there is no guarantee it will work.

How, one distribution insider asked me recently, can you 'telesell' with a catalogue of more than 10,0000 SKUs (stock keeping units, which is distributor-speak for part numbers) and a constantly changing product range? Fully integrated back-office systems are needed to support such a system and if you don't have them, you have no chance of giving resellers the information they need.

The other big initiative is e-commerce. One source says the leading distributors in the UK are still only doing about one per cent of their business via their online systems. They are being used extensively to look at pricing and availability, which is saving some money. But the systems are a long way from freeing up sales teams from taking orders so they can sell more or be disposed of, thus cutting costs.

But is cost-cutting the way to achieve success with the SME reseller? Last week, I talked to a small dealer who had been to dinner with a group of other small dealers and senior staff from one of the big broadliners. This could be dismissed as a stunt - a way of flattering the smaller dealer by introducing him to the managing director of a #500 million operation - but that's not how the dealer saw it. He saw it as being looked after and the impression he gave me of the distributor was very positive.

Yet this was the same company that had been pumping heaps of money into a telesales operation without any noticeable effect. This demonstrates that, with dealers, some things work and other things don't. The SME dealer cares about the human touch - doing business with a person, not an e-commerce server or a nameless telesales operator accessing a database of product codes. It's still a people business and distributors need to remember that.

Simon Meredith is a freelance IT journalist.