Spotlight on distribution: Supply and demand
The second question in our Spotlight on Distribution campaign is centred on the relevance of distributors. Sam Trendall examines if they have a future
Whatever product you wish to sell or procure, it is a well-worn axiom that to cut out the middle-man is invariably a good thing. But can the same mantra be applied to the channel?
The second question in the CRN Spotlight on Distribution campaign examines whether distributors add enough value to justify their place in the supply chain.
Few would dispute that the profile of an average distributor has changed massively in the last decade, and that the role distribution is expected to play has become much less clear.
As VARs rush to migrate their revenue streams towards managed services and cloud-based delivery models, distributors have to change tack or face obsolescence.
Antony Young, director of consultancy Demuto, claims many people in the channel at vendor and reseller level are "guilty of expecting something for nothing" from distributors.
"Few distributors can afford to invest in pre-sales and marketing, and I think the whole channel suffers as a result," he says.
Like Young, 54 per cent of those asked agree that distributors play a vital role in the industry. Only 14 per cent think that vendors and resellers would cope on
their own. But about one-third feels that distributors could do more to justify their place in the channel.
Barrie Desmond, business development director at VADition, argues that, outside of accommodating credit lines, broadliners add little or no value.
Bell Micro,s Eddie Pacey believes the word distributor will soon bear little relation to what these VADs deliver, as they strive to become "solutions and services distributors".
"The differentiator between VAD and VAR is now wafer-thin, limited only perhaps to inventory holding and credit," he adds.
Sophos is one vendor to operate a one-tier channel model. Its UK and Ireland vice president, Ciaran Rafferty, says that being close to partners has been beneficial.
"Distributors have to maintain the value they bring to their partners because they are one step removed," he says.
Sophos is not the only vendor to obviate distribution, but bringing all the services that distribution provides in-house would be a mammoth task for most big-name vendors. Smaller players too would surely struggle to make their voice heard in such a competitive market without the advocacy of distribution.
Unsung hero
David Caughtry, director of core technology at Computerlinks, said: "Often, the VAD is the unsung hero, taking on many of the tasks that vendors can,t, won,t or don,t want to do, and providing knowledge and expertise to the reseller that the vendor would struggle to provide itself."
John Toal, UK country manager at Avnet, agrees that vendors will continue to rely on distribution. "All the time, suppliers choose to outsource the supply chain, channel support and sales development functions. There will always be a place for
distribution," he said. "Suppliers and business partners vote with their feet."
Necessary evil
But perhaps this debate is nothing new. Westcoast sales and marketing director Alex Tatham claims he has encountered the misconception that "distribution is a necessary evil" for the entirety of his 20-year channel career.
"It is surprising how many stick with distribution instead of choosing the option of a direct model - just ask Dell resellers," he adds. "How many times has the press predicted the end of distribution, only for distributors across the world to adapt to cost pressure and survive and thrive?"