Spoiled for choice
In an increasingly aggressive market, distributors have to stand out to win custom. Sam Trendall investigates what motivates the choice of partners for VARs
The bottom line: Price was singled out as resellers' foremost factor in picking which distributors to work with
From the many price comparison web sites constantly vying for our custom to supermarkets that double up as finance houses and mobile network operators, the concept of choice is inescapable in every sphere of industry today. Competitors in the IT distribution space, just like those in any other business, must prove themselves worthy of being chosen, by both vendors and resellers, in an increasingly noisy and crowded market.
The results of CRN,s poll examining what factors most influence channel firms, choice of distributor perhaps speak to the ongoing economic malaise. Price emerged as the foremost consideration, having been picked by 27 per cent of respondents.
Relationship with staff came a very close second, on 25 per cent, followed by availability and logistics with 18 per cent and training, support and technical services with 16 per cent.
Just five per cent of respondents picked their distributor based on credit and finance factors, while nine per cent claimed to have other reasons motivating their distribution choices.
Gary Duke, sales director at VAR LAN2LAN, endorsed the adage that people buy from people.
"We look at three key components when choosing a distributor: innovation; true value add by means of support; and then price," he said. "Currently, a large proportion of distributors have remained static, and are only interested in providing a broad range of products at a competitive price, without considering the true meaning of adding value."
Duke,s comments allude to the most divisive issue in distribution today - the question of adding value. Smaller local players will tell you that they alone are the keepers of the VAD flame. But the quartet of US giants - Ingram Micro, Avnet, Arrow and Tech Data - argue that they have moved way beyond a model centred on sky-high stock levels, ready lines of credit and logistical might.
The right distribution partnerships are crucial for ambitious vendors hoping to make a splash. Stuart Quinsey, EMEA sales director at migration software vendor ChangeBASE, said firms such as his require a specialised, hands-on approach.
"I would not score a distributor highly on its number of call centre staff, size of warehouses and so on," he said. "In recent years it seems far fewer niche distributors are entering the market as it is a highly competitive space, dominated by a number of large players with relatively hefty buying power, reach and competitive advantage."
A skilled touch
More established players too require a skilled touch. Terry Greer-King, UK managing director of security vendor Check Point, and Nigel Jones, business development director at comms manufacturer Alcatel-Lucent, both stressed that added value is still their primary consideration in picking distributors.
James Perkins, sales director at UK comms distributor Nimans, believes that localised players can still provide an intimacy that the broadliners lack.
"If the buyer is a high street retailer, it comes down to ease of doing business. In smaller businesses a lot of it is [about] trust," he said.
"If there is a credit issue, we can deal with it. We are not faceless agents, which is something broadliners struggle with, as a lot of it is automated."
Andy Wright, technology and security director at integrator 2e2, agreed that what resellers require from distribution partners has evolved beyond concerns about price and product.
"Distribution was once focused on price and availability, but as we continue to witness commoditisation and resultant margin erosion for all hardware infrastructure projects, service providers must increase their services mix and annuity revenue to stay ahead of the competition," he said.
"2e2 gravitates towards vendors and distributors that integrate the products they are selling into wider, service-led offerings."