A quarter-century of change in the channel

Phil Jones reflects on some channel lessons of the past 25 years

Jones: There has been a lot of change and more will follow

In the past quarter of a century, the channel has faced a host of challenges that have transformed the industry. Vendors, distributors and resellers have had to work hard to adjust or overhaul business models and relationships to fit changing market conditions.

We recently celebrated 25 years in partnership with a distributor and this got us thinking. What will help us shape a successful channel for the next 25 years?

Nothing has changed the channel as much as the internet. E-commerce has transformed pricing structures.

The channel has been forced to either embrace the online channel and compete on price and volume, or evolve its business to provide more consultancy and value-added services.

One interesting trend that has emerged is ‘glocalisation’. The explosion in mobility, applications, intelligent search and sustainable procurement is driving more online purchasers offline into local markets.

Resellers must make themselves visible through an appealing, user and search-friendly website or by engaging with social media tools such as Twitter.

The past 25 years have seen successful businesses snapping up competitors. The channel is still experiencing a great deal of M&A activity, proving that there are deals to be done.

However, sometimes it has felt that the big have got bigger and the small are left to fight for what’s left. That has presented an opportunity for channel players to become more specialised.

They are differentiating by being more consultative in their sales, and not being hooked into volume or value pricing discussions, but rather using solutions to justify value. I anticipate more of this as technologies are introduced, and distributors need to be well set up to serve them.

Recently, the channel has been suffering from inconsistent credit insurance cover. Over the past 25 years we have seen an increasing dependency upon credit as customers in the supply chain look to improve their own cashflow or increase credit lines. The credit crunch changed all that, taking some companies, such as Woolworths, over the brink.

It may feel as though this is a recent development, but it is something that has been creeping up on the channel over a decade or so. Just as with the banks, there has been a buoyant mood and perhaps an over-reliance on credit insurance.

However, now is not the time to point the finger of blame, but the time to work together to find smart, practical credit-management tools for companies of all sizes.

Relationships will remain critical for success in the channel, both online and offline. Communication and trust that may have taken a battering in the tough times need to be high priorities for future success.

The industry will evolve, further consolidation will take place, and progress will be made on all fronts. The next 25 years promise further change with new technologies and people breathing new life into the industry. Exciting times for all.

Phil Jones is sales and marketing director at Brother UK