PERSPECTIVES - Distributor viewpoint

The internet is giving distributors a place to sell advanced services and support. If they are to survive, this has to be realised, and soon.

Although it's long been recognised that the internet has to be theces and support. If they are to survive, this has to be realised, and soon. way forward, distributors have been slow to make it a central part of their business.

James Wickes, managing director of InterX, the parent company of Ideal Hardware, says: 'Everything is pointing to the fact that the channel has to move on. A lot of the recent aggravation has been down to the fact that it has failed to do that.

'Look at the attitude of banking and insurance in the UK and the US. British insurance firms are ahead in the use of the internet but the banks are way behind because they have huge physical infrastructures. Distribution has the same problem - people are not moving quickly enough,' he adds.

Distributors have been having a hard time of it and much of that can be blamed on the state of the market. But some of it's certainly down to distributors failing to heed captains of the industry - use the internet to reduce costs or find yourself becoming uncompetitive.

While distributors struggle to capitalise on the internet to make their businesses efficient and competitive, there are distributors helping dealers make money out of the internet - not by helping them set up e-commerce operations, but by helping them sell the internet.

It's not just the industry that has to embrace the internet and use it as a trading medium. The message applies to all industries, and the introduction of internet technologies and e-commerce systems to commercial companies and service organisations promises a whole host of opportunities.

Help getting started is needed and it's up to the companies operating in the distribution sector to provide that assistance. 'The role of the distributor in delivering the internet to the resellers is central, but most distributors just haven't worked that out yet,' says Mark Randall, managing director of specialist internet services provider, ATL Network Systems.

Until now, distributors have been either trying to get themselves e-commerce-enabled or providing products that are sold around the internet connection.

'There's validity in doing both but they miss the central point - to provide a portfolio of services, and the expertise needed to get re-sellers fully involved,' says Randall. 'Services are what matter and it's here that the most money can be made.'

ATL is focusing on providing the resources, support and skills needed for internet and data communications services. It also provides the infrastructure products, the BT lines and various internet services. It's also the UK master agent for BT's e-business channel.

The advantage for resellers participating in this market is that revenue is long-term. 'You are typically selling a three to five year contract , which sustains your margins over a period of time. It gives the opportunity to sell services and add value by addressing the needs for greater bandwidth, applications and ASP services,' says Randall.

But resellers also have a problem in this area. 'Most resellers are tied up on the sale of products,' he adds. 'They don't have the expertise and the knowledge to get up to speed in this area.'

Bernie Dodwell, business development and marketing manager at security products distributor Allasso, agrees that distributors need to provide more than products in the internet sector. It may also be necessary to specialise in a particular area to help resellers. 'The product is only part of the system. Issues such as security can only be defined by the user in conjunction with human expertise, and then implemented in the product.' he says.

'Take a firewall product for example. This product can't just be dumped onto the system, it needs to be configured to the individual specification.

This is where the distributor comes in, either as partner with a manufacturer or drawing on its own in-house expertise to make sure that customer requirements are fully matched,' Dodwell says.

Mark Saville, general manager at distributor Peapod, says there's a clear role for distributors and service is vital, but the products can't be ignored and good purchasing decisions simply can't be made without the distributor's in-depth product knowledge. 'The internet hosts huge amounts of information and anyone who wants to make buying decisions in IT has to find, research and make selective judgements from this vast array of data,' he explains. 'Any product selection is not simply based on the marketing information provided on a glossy or Web PDF. Distributors are a key channel of influence adding value by raising awareness.'

Saville believes the distributor's role is to represent the vendor during the early adoption phase of a product, educating resellers and users.

'Even if software is licensed over the internet, there are issues of localised support. Until a package sells in significant quantities and becomes wide-spread, it's the value added distributor that can afford to invest in significant technical resources because of the aggregate service calls being made by its resellers.'

As with any other sector, during the early phases of market development, specialist software vendors want to re-invest most of their revenue back into R&D so they can improve products. The distributor markets and provides support services.

Robert Nash, sales and marketing manager at internet software distributor Unipalm, says only now is the real opportunity opening up for distributors.

'The whole market is beginning to wake up. Two years ago, people just talked about it, now they're taking action.

It's happening on a huge scale. Many people now have a static intranet and more are getting into e-commerce and live data.'

Distributors are being affected by the internet in two distinct ways - their model has to change with a developed e-commerce system if they are to cut costs and remain competitive. Secondly, they have a growing opportunity to provide the very specialist support and services that resellers will need to raise their skills to suitable levels, and fully realise the opportunities offered by the internet.