To protect and serve

Sara Driscoll asks why vendors aren't doing more more to give resellers price protection

With so many acquisitions and potential acquisitions going on in the channel at the moment, it is a wonder that the managing directors of most smaller resellers haven’t leapt on the opportunity to take the money and run.

Many of them are already seeing dollar signs in front of their eyes, and with the pressure constantly mounting and not much help coming from vendors, it cannot be long before the market consists of just a few extremely large players, as every other reseller jumps ship or is swallowed up by a bigger fish.

But losing the smaller players will cause havoc in our market. The managing directors of the smaller players often have their own cash invested in their business. They actually care about the work they do, about each deal and about how much real value they add to it, because they know that makes a difference to their bottom line. These smaller resellers tend to be work exclusively with a single manufacturer, and therefore help to drive revenue, brand awareness and end-user loyalty in their direction.

Vendors can go some way to preventing smaller resellers from selling up and moving on. Easing the pressure and using their influence to offer resellers protection would be a good start. Speaking to several resellers last week, it became clear that lack of protection is one of their main concerns – not just price protection so that they can make more than two or three points of margin, but protection within deals to ensure that rivals do not undercut them, effectively leaving them to function simply as a high-price consultancy.

Margins are being driven down to the end-user level, and the absence of control exerted by vendors over the channel means that resellers are being played off against each other. As one end-user told me, the almost careless way that vendors are treating their partners and their sheer desperation for deals means he can’t lose. Unfortunately, it also means the channel can.