Arrow exec: Marketplaces won't dislodge distribution's role in channel

End user consumption will determine the future shape of the model, according to Arrow's UK boss

The emergence of marketplaces for B2B transactions will not usurp distribution's role in the channel, according to Arrow's UK and Ireland VP.

Microsoft recently unveiled some new additions to its marketplace amid predictions that marketplaces will account for nearly a fifth of all B2B transactions in the next five years.

However, Mark McHale, Arrow's UK boss, told CRN that distribution's ability to adapt means it will continue to make itself indispensable to the channel.

"When things are mature, product supply is not a problem - but it's about achieving the maturity," he explained.

"I think that's where Arrow looks for opportunities in marketplaces, leads with new areas of business, lets that become mature and then we can move on."

Dan Waters, solutions director at the broadliner, agreed, adding that disties can offer a level of support that clients can't get from a marketplace.

"Product supply is, of course, a part of the differentiation we need to drive in the market," he explained.

"But when you take it to the next level around enablement, engagement and technical and support services, the marketplaces cannot deliver it and aren't designed to do it.

"Our offering around engagement is very differentiated in terms of that perspective. Core product supply doesn't go away but the whole value is still unique."

The changing nature of the channel means distributors will have to take a bigger part in conversations with end users, according to McHale.

Expanding on the points made during his keynote presentation at the recent Arrow Vision event in London, the VP stated that the broadliner will be engaging with partners differently.

Distributors will take on the role of technology aggregators, helping partners to transform their customers' business model, he explained.

"We have to get tools and services and people to be able to do that aggregation," McHale said.

"People seem to think that just putting one piece of tech with another is a solution, but that's not what we call a solution in our business.

"We have to go much higher and talk to end-user customers to really understand what they desire in their business and then twist it to tech to come back.

"That's what we see our role as - helping our partners understand what the requirements really are, through the aggregation of technology.

"We want to be more front-footed with the partner, shoulder to shoulder with them in their conversations with their customers because we believe we have the right skill set to do that with them."

The UK boss claimed that customers are seeking technological solutions to change their business models in order to give them a competitive advantage, outlining five "conversation drivers" that he believes will help partners engage in more productive dialogues with clients.

These five pillars are: modernising the datacentre, integrating the public cloud, evolving the digital workplace, embedding security and data at the edge.

"We are laying down our path to making sure we have these building blocks that we can support our partners with our portfolio and at point product level, if necessary, with the right level of support," he said.

"We then go on to the next stage with the areas that we are specialising in, which we have chosen and think are hot in the marketplace and will resonate with end users and our partner base, to make sure we are having these conversations.

"Then we want to climb higher up the chain and what that will bring will depend on how partners respond to the value we are trying to offer them."

Solutions director Waters added that the evolving nature of the channel could result in distributors serving a very different market, and could change their competitor landscape.

"Will we compete with the people we compete with today? I'm not sure because we could take completely different directions," said Waters.

"In terms of what distribution is going to look like, it's going to serve a very different market.

"What we look like in five or 10 years will absolutely depend on how the end users are consuming and what mechanism they are consuming through.

"We've got to adapt; we like to think we evolve a lot quicker than our competitors in the market, but you've got to stay ahead of the curve.

"So distribution has to constantly evolve to make sure that we are relevant to the market, and the market that we serve changes all the time."

McHale added that the partner may well have to take a long look at their own business model in order to facilitate the changing consumption habits of end users.

"It depends on the attitude and desire of the channel partner," he said.

"Do they really want to change or just continue with what they do? They may make a great living out of it and that can continue for many years.

"If they have the desire to change, they have to look at their own business model to find out the end user's business model and that is hard work for everybody, but the rewards will be much richer for everyone concerned."