Once upon a time it was easy - the route to market for the vendor wasternet, direct sales and mail order - are challenging traditional models. Will resellers be quick to adapt? through the distributor to the dealer and on to the customer. But the days when the vendor and the channel as a whole could dictate where the buyer buys are long gone, believes Trudi Mitchell, e-business manager at Hewlett Packard. 'I don't think we've been able to do that for some time and the Web is accelerating that process. On the Web, customers are king and choose the product and the route to market that they want.'
Even companies that have always used the channel have to look again at how they reach the market, says Dave Mills, marketing director at thin client vendor, Wyse Technology. 'We have had a traditional model for 17 years but the internet is changing that and shortening the lifecycle of products in the channel. The process of reaching the customer is being compressed and the channel is more segmented and less cohesive.'
As the transition from the old linear channel model to one in which anything goes gains momentum, to survive, vendors increasingly have to give the customer exactly what they ask for. Resellers will have little choice but to adapt their businesses accordingly.
But the Web is just the latest development in hyperchannels - mail-order and off-the-page sales have been around for years. Direct sales seem to be rising and there are a higher proportion of them in the UK than in Europe. Multiple routes to market are a fact of life and they are forcing more changes in the way the channel works.
But the need to manage disparate channels is nothing new, argues Con Mallon, marketing manager at Toshiba. 'It's a symptom of a dynamic and growing industry. The sort of growth we have experienced in PCs means that different channels and models will emerge as more entrants are attracted to the market. What then happens is a contraction and retrenchment, and people and models fall by the wayside. We then move back into another period of growth.
'One cannot be prescriptive or definitive about how many channels are needed - it is not a question of numbers. It is about having enough channels available to service the level of business you want to do, to the level of service you want to provide,' he adds.
This statement reveals what we all know to be true anyway - that the vendors, in the end, need to sell boxes. It is not about loyalty to the channel or what they believe - it's about hitting sales targets.
But vendors can't take all the blame for the changes taking place, says Wiebe De Vries, European managing director of Network Peripherals - vendors have a job to do after all. 'Direct selling stems from one goal and one alone: optimising margins that are otherwise left in the channel. This is partially due to the position resellers have taken as well, since some of them do not add value but are making as much absolute margin as possible.'
Andrew Percival, sales director at networking specialist reseller Mayflex, says the channel has changed noticeably over the past 12 months and the areas between the different levels are becoming less clear. 'We have noticed a blurring of the supply chain borders - a lack of clear structure in the supply chain from manufacturer to distributor to dealer to user.'
As a result, distributors have had to improve their value-added services to retain their advantage with faster lead times, extended credit, marketing support and training. Or, they are having to emphasise their services businesses or move to white-box and own-brand products.
However, all of these 'value adds' obviously eat into reseller and distributor margins. The second knock-on effect of this is that distributors are having to look more closely at their supply chain in terms of sales strategy, pricing strategy and general marketing activities. But rather than going into competition with the channel, a more likely outcome is a greater alliance with the reseller community - or so they claim.
Robert Nash, sales and marketing manager at distributor Unipalm, says you simply can't replace the pre-sales expertise, marketing effort and sales skills that distributors and resellers provide. 'They are essential in a complex technical project sale such as deploying a fully functional and secure intranet with access to legacy systems.
The picture is different for simple commoditised products such as in the home user environment, traditionally available through retail. The channel will need to adapt to EDI as a method of physical distribution, but the need for expertise, and thus the channel, remains in the business-to-business environment.'
But the dynamics are changing fast - and not always with the best results for the customer, says Mills. 'The channel is becoming more segmented and is delivering lower prices and higher availability to customers, but not necessarily delivering a working system. The one big variable today is the impact of the internet on this process and how quickly it speeds up the commoditisation and volume.'
Resellers can co-exist with multiple routes to market as long as they have a clear focus and a tangible service product, he adds. And as the old channel structure breaks down, resellers will have to evolve and adapt to changes faster. This probably means getting smarter by harnessing technology to make it easier for customers to buy.
So, as vendors go through multiple routes, more resellers will start to take them on at their own game and offer products through the Web.
But where does this leave us - with vendors, dealers and possibly distributors all competing direct for user business?
Of course, this is something that every indirect vendor and distributor will refute is ever a possibility. But there is a need for much closer co-operation now. Unfortunately, the industry is not seeing a lot of it as competitive pressures build.
Nick Payne, sales and marketing director at helpdesk software vendor, Sunrise Software, believes there is a woeful lack of support for resellers.
'Vendors need to invest more resources in raising the value of customer service through the channel. Co-operation with resellers on this crucial step is key for the long-term health of the vendor-reseller-customer relationship.
'Resellers should not be left to shoulder the burden of establishing such services alone. It's time vendors invested more heavily in developing a systematic approach to arming their resellers with a wide array of useful services that support their product line.'
Resellers don't seem to believe that vendors and distributors fully appreciate them or understand their needs. A recent report by channel research company Motivforce, found that only 40 per cent of resellers are involved in vendor education programmes. It said this was due to the poor communication of programmes and vendors' inability to identify which type of support will deliver a real business benefit to resellers.
'The industry is well aware of the considerable budgets manufacturers put against developing their relationship with resellers. And yet there is little analysis of the structures and delivery techniques that are most beneficial to the reseller and which underpin a successful relationship,' says Randle Stonier, managing director of Motivforce.
In the report, one reseller claims: 'Manufacturers' sales teams are generally clueless, they rarely contribute to the sales process of any value and then claim the credit for sales through "their" channel.'
Mairead Lambe, channels manager at remote access vendor WRQ Software, works closely with only about 30 firms, but she believes that, even with relatively specialised products, this is the best way to deliver results.
'Some products lend themselves to other routes such as electronic distribution and people do tend to become familiar with our products, but you've got to look at what they are doing with that product in the future. Yes, we have to make sure the customer is satisfied but we also have to look at what our partners can provide for them. It is just a matter of focus - I would much rather spend time building opportunity than managing conflict.'
Even those vendors that pursue volume must be careful, says Mallon, as too many sales outlets might mean over distribution - and that has a lot of associated downsides.
'You can manage different channels but only by being in one channel at a time. We have large dealers, small dealers, off-the-page/catalogue dealers, retailers, and Vars - it can be done. What the vast body of evidence suggests to date, is that you can't be both direct and indirect and be successful in both at the same time. This is something that Compaq is obviously struggling with, and increasingly Dell will be troubled by as well.'
Just adding routes and complexity is not the answer, claims Mallon. But many vendors are being distracted by the need to hit targets. 'It is a recipe for disaster to grab every up-coming concept and go with it. This is a trait of vendors that have started to see their businesses lose impetus and seek the easy or fashionable answer. They have lost sight of their business philosophy and business principles.'
Mallon says vendors should try to establish their core competencies and combine these with the skills of other parties, ie work with distributors and dealers that can add something to the sale, using different channel partners to address the appropriate routes to market.
'Things do change. Ask a catalogue dealer if they would have said four years ago that customers would be buying products from them over the internet.
Of course they will tell you they knew it would happen, while at the back of their minds they are mightily relieved that they had the flexibility to change and adapt.'
Paul Jenkins, sales director at Partners in IT, says the key to surviving in this reshaped channel is identifying the right partners and the customers who really need the services they provide.
'The rapid growth of some resellers has depended to some extent on identifying other companies within the channel that require instant services capability from one company, rather than a loose collection of contractors. The growing demand from both ends of the supply chain is for resellers to demonstrate value.'
He adds that the shortage of skills and the challenge of managing a completely different sort of business within a company that is based around the delivery of products is driving the need for partnerships to be formed on service.
But resellers must be careful about who they partner with as service partnerships can be volatile, warns Jenkins. As product resellers determine that they can and should invest more of their own resource in the deployment of services, the service partner will look for more direct relationships.
In other words, whatever happens in the future, businesses can't stand still - they have to continue adapting. In a sector with multiple routes to the market and a growing complexity of relationships between vendors, distributors, resellers and service companies of every kind, the ability to adapt as a business may be more crucial to long-term survival than any other skill.
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