Are You Getting The Most Value From Your Distribution Partner?
Twenty years ago, distribution consisted of resellers calling their sales contact at their favorite suppliers and ordering the needed component for a solution. The shipping logistics and whether or not the product was in stock were the most complicated parts of the transaction. Much has changed since then, with many distributors offering hardware, software, and professional services beyond just product knowledge and shipping. The VAD (value-added distributor) has emerged over the years with extra levels of support (e.g. integration services, marketing assistance) and a myriad of preconfigured or à la carte custom solutions. With the transition to value-added and solutions distribution, there is a subtle distinction between what some of the distributors offer and what their VARs do. I don’t mean to imply that distributors are replacing the solution provider’s role with end user customers, because that’s far from the truth.
The relationship between solution providers and VADs has become stronger as direct sales competition has eroded hardware margins. Both resellers and distributors are dependent upon the health of the channel model, and working together will provide a united front in capturing customer sales today and in the future. According to the distributor executives I have talked with, their largest revenue generation comes from current partners, which is the thought behind many of the loyalty-driven, incentive types of programs. Even with that allegiance, VADs must provide other value propositions (such as consulting and professional services) that don’t typically show up on a Web site in order to keep price from becoming the determining factor in selecting a distributor.
Value Goes Beyond Price
A true VAD offers services that aren’t profitable or feasible for you to do it yourself or provides technology or capabilities for VARs to do it themselves. One example is SYNNEX’ PRINTSolv solution, which allows solution providers to assess, build, finance, and order the right printing components for their customers (to be implemented by the VAR). One component of this is a USB-drive assessment tool that takes a quick (within minutes) inventory and usage reading of a customer’s global printing network, allowing solution providers to determine the need for upgrades. SYNNEX’ TSD (Total Solutions Distribution) group built this program with remote monitoring capabilities and delivery options to fill in any gaps of a solution provider’s core competencies. These ideas don’t always originate from the VAD, as components of the PRINTSolv solution resulted from VAR ingenuity.
The collaboration between solution providers and SYNNEX’ TSD Division is intended to maximize the technology and service offerings built into a sale and increase current and future revenue for channel partners. The PRINTSolv approach allows VARs to offer and support more substantial solutions, while the VAD hopes to differentiate itself from traditional distributors.
There are also multiple VAR collaboration programs being nurtured by distributors, including Ingram Micro’s VTN (Venture Tech Network) and IMSN (Ingram Micro Services Network) and Tech Data’s Tech Select. These programs allow solution providers to work as a national group to implement and support each other’s solutions.
Other VADs provide business education (ScanSource’s Profit Maps) and breakthrough technology training (ScanSource’s RFID [radio frequency identification] Edge) for their partners. These courses and related tools are designed to improve the success of each solution provider. If you have marketing needs, distributors such as BlueStar (via the Fusion program) often offer free or reduced cost mailing, Web design, and collateral printing services.
Distributors and VARs face commodity-pricing challenges from competitors, and solution providers need to look closely at what their VAD partners are doing to counter that. Select one or two distributors that allow you to offer more than a lower price to your customers, and push them to provide you with the capabilities to help make your business grow.