Avnet scores Kelway supply coup

Following years out in the cold, distributor emerges as a big winner in super-VAR's £92m annual supplier tender

Avnet has bagged preferred supplier status for NetApp, Red Hat and VCE in super-VAR Kelway's annual distribution tender.

Despite not traditionally having been a big Kelway supplier, the distributor emerged as one of the big winners from Kelway's yearly supplier rejig which saw close to £100m in projected hardware and software business put up for grabs.

CRN understands the NetApp supply deal, which Avnet won from rival Arrow ECS, is worth a projected £8m over the next 12 months.

John Johnson, vendor and alliances director at Kelway, said the process – which was delayed to accommodate recent acquisition Equanet – was designed to drive the best commercial terms and give distributors visibility of its growth plans.

Preferred supplier agreements were handed out on 1 May.

"Distribution is our preferred route for sourcing hardware," said Johnson. "We have some direct relationships with a couple of tier-one vendors but the value distribution gives us is significant and more often than not direct is a more painful route than distribution."

Johnson confirmed that NetApp was one of the only vendors which saw a wholesale shift in suppliers from last year.

"[Avnet winning NetApp] was certainly a reflection of the position they put forward to us to enable us to continue on our growth path with NetApp," he said. "Arrow remains an important partner for us and we are engaged with them on strategic lines of business."

Despite traditionally supplying EMC to Kelway, onlookers said Avnet has struggled to win favour with a VAR that now boasts sales north of £350m following a private equity-backed M&A blitz.

"We have given Kelway a lot of focus and effort over the past 12 months and believe it has paid off," said Laura Bouchard, UK sales director at Avnet Technology Solutions (pictured).

"They are a very strategic customer to us and the relationship has significantly improved over recent months."

On top of NetApp, Avnet also scooped preferred supplier status with two further vendors it had not supplied last year: Red Hat and VCE – which CRN understands Kelway is projecting will be worth £2.5m and £3.5m over the period. According to sources, the distributor has also bagged about £5m of Kelway's HP business, which has traditionally been shared between SDG and Computer 2000 – two distributors which merged last autumn.

Avnet also retained its business with a number of vendors, including EMC, Juniper, Riverbed, F5 Networks and Barracuda.

The process was set to be completed earlier in the year but was delayed when Kelway acquired Dixons-owned Equanet, which has a much bigger business with several vendors. This includes Apple, the supply of which Kelway has carved up between several distributors, Johnson said.

"It was important we took a really holistic view of group business. Equanet added a new dimension, so it would have been short-sighted to look at the Kelway business alone," he said.

All in all, the supplier agreements were worth a total of £92m, according to sources.