Q&A: POS Distributors

1. What's happening in the POS (point of sale) market that makes distributors a valuable part of the supply chain?

Matt Chamberlin (BlueStar): Now that the economy is back on track, it is very important for distributors to provide value-added services such as integration of software and hardware, as well as terminal setup so a VAR can plug and play an installation. There is too much business out there to worry about these services, especially when a distributor will provide them and the VAR can still make a profit.

Bruce Mann (CRS): Hardware manufacturers have either scaled back or have not yet developed the infrastructure to support VARs. This is especially true of international manufacturers. Many innovative and cost-effective products are found internationally. Distributors look for these products and introduce them to VARs, thus giving them access to best-of-breed products that would otherwise be inaccessible. VARs should work closely with distributors to obtain products and services that will allow them to attack new markets.

Michael Shea (Nimax): Distributors are educating channel partners on new technologies, whether it means partnering with a particular manufacturer or doing it on our own.

Derrell Ness (NSA Distribution): The combination of the current economic climate and the maturing market for traditional POS continues to put pressure on margins throughout the supply chain. These conditions reinforce that the distribution channel is the most efficient means of supplying POS products and value-added services to VARs. Distributors reduce costs for manufacturers by holding inventory and by providing support services that would otherwise be the responsibility of the manufacturer.

Mac Flythe (PC4): New advances are constantly being made in POS technology, thereby providing VARs with opportunities to provide their customers with innovative solutions. Wireless and biometric devices are just two of the new technologies that PC4 offers its customers. PC4 is not only able to provide the latest products, but also the knowledge and support to assist VARs in successfully implementing them.

Paul Constantine (ScanSource): More end user customers are seeing the benefits of leveraging wireless networking technology in POS applications. From line busting to remote POS and kiosks, wireless is becoming pervasive. ScanSource has an entire Professional Services Group dedicated to helping VARs understand and implement wireless technology. In addition, we have sales units that can help VARs with business telephone, converged communications, and computer telephony integration (CTI) products.

Michael Smith (Telpar): A true distributor has VAR managers who can personally support VARs. With manufacturers that are selected as the best in their respective categories, the distributor then adds an array of other products and services like software, integration services, and special incentives that all can be channeled through the VAR for a total solution to the end user. Distributors add value to the supply chain by educating and informing their VARs of the latest technology trends, such as network interface changes and wireless or mobile computing products.

2. What benefits or services do you provide to a VAR that others do not?

Matt Chamberlin (BlueStar): We have generated over 10,000 leads in the last two years, and every lead is given to VAR partners. BlueStar has partnered with numerous POS software developers who in most cases have more deals than they can handle and need VARs to close them. We also provide services such as integration and terminal setup at no additional cost, which allows VARs more time to sell. They can mark up our services and find more deals. We employ integration specialists who provide pre- and post-sales integration of both hardware and software. BlueStar offers a line of open architecture POS terminals, allowing VARs to sell terminals at all price points. BlueStar Systems Group is composed of POS system experts who assist VARs throughout the entire sales process.

Bruce Mann (CRS): CRS is positioned as an importing distributor. CRS identifies new products and services from a variety of international sources and works with the manufacturers to ensure that the products are ready for the CRS-defined market. CRS supports the products on a local basis by offering toll-free unlimited support, on-site training, and spare parts inventory. From a marketing perspective, CRS VARs enjoy co-op advertising assistance, leads, trade show support, and assurance that CRS will not sell directly to a VAR's customers. We also offer training, cooperative advertising assistance, extended terms, and complementary products or services that increase the revenue a VAR can enjoy from a customer relationship.

Michael Shea (Nimax): Nimax acts as a fulfillment center for the VAR, eliminating inventory carrying and shipping costs. We also extend financial terms to our customers and offer extended services, such as RF (radio frequency) Express consulting services to aid VARs in handling large projects. Our business development specialists work closely with VAR customers to help them promote and grow their businesses. Nimax also is a factory-authorized service depot for many product lines including Epson, Samsung, Metrologic, PSC, and more. We offer a co-op marketing program, which provides funding for a VAR to reach more customers through marketing vehicles such as print advertising, direct mail, and joint trade shows. Nimax is also in the process of developing an Internet storefront program, where VARs will be able to merchandise Nimax' product line as their own.

Derrell Ness (NSA Distribution): NSA Distribution provides second-level support to VARs, which saves VARs valuable time. For example, NSA Distribution has developed close relationships with many POS software developers through our software partner program. This enables NSA to test software compatibility with the various POS terminals that VARs sell. If an issue arises in system configuration, NSA can support the VAR because we usually have the software running in our lab. By purchasing POS systems that are pre-configured and tested, VARs can use NSA's technical resources to best leverage their own technical staffs and increase their service levels while still cutting costs.

Mac Flythe (PC4): PC4 is a wholly owned subsidiary of ICRDA/SDA. We provide a one-year warranty on all POS hardware we sell and offer cross-shipping with same-day dispatch. In addition, we have an Annual Member Rebate Program for ICRDA/SDA members, which awards members with rebate credit based on total yearly purchases from PC4. For many dealers, this rebate snowballs into hundreds or even thousands of dollars by year-end. PC4 also works hand-in-hand with VARs to provide account sales assistance. PC4 does this by accompanying VARs on major sales calls, helping in the creation of a comprehensive product solution, and providing the best pricing.

Paul Constantine (ScanSource): In addition to product and technology training, we offer business-related education. In May 2002, we conducted a daylong class in Atlanta called "Financial Principles for Solution Providers." It covered cash flow analysis, return on asset investment calculations, and financial decision making. We also offer solution selling and human resources-related courses. We carry extensive inventory and have many resources available to assist our VARs and to extend their product offerings. We also take on the cost of maintaining and staging inventory, and we provide systems integration and software loading for the VAR. This way the VAR saves money on time, resources, and freight.

Michael Smith (Telpar): Telpar's VAR managers average more than 10 years of experience and are located in seven locations across the United States for regional commitments to VARs. They offer personal assistance like consultative selling and joint product demonstrations at their customers' sites. We also offer 300 nationwide service technicians, on-site service contracts, and extended warranty depot repair. VARs can participate in incentive programs targeted to specific markets like retail and hospitality. Because distributors provide the latest information on the industry trends as well as tips on selling new technology and system solutions, VARs will retain customer loyalty and improve their bottom lines.

3. Describe a successful VAR POS installation.

Matt Chamberlin (BlueStar): BlueStar recently helped a VAR successfully close a large POS kiosk deal with Kroger. BlueStar assisted with the software development, sales support, hardware integration of terminals and peripherals, software integration, and installation of the units. This will net the VAR more than 500 terminals over the next 12 months.

Bruce Mann (CRS): CRS worked closely with Metro Cash Register of St. Paul, MN, to solve a perplexing issue related to network failure in a touch screen PC-based golf pro shop application. Metro customers had become frustrated with the network failures and Metro looked to CRS, its longtime supplier, for potential solutions. CRS suggested that Metro beta test its new IT-2000 touch screen product. The touch screens offered more features but were less expensive, and the network problems disappeared.

Michael Shea (Nimax): Nimax worked with its VAR, International Retail Methods, on a successful installation in AutoMercado, a major Costa Rican supermarket chain. Nimax worked through the geographic and logistics challenges of the deal with International Retail Methods. Nimax maintained coordination among International Retail Methods, several manufacturers, and the end user to keep things running smoothly. A significant challenge of this deal was to ensure that the appropriate products were shipped to Costa Rica according to import and export laws. This required special staging of hardware components like scanner/scales, POS keyboards, and receipt printers.

Derrell Ness (NSA Distribution): NSA recently provided more than 100 Posiflex integrated retail terminals for a VAR in the Pacific Northwest. NSA staged the hardware, set up the hard drives, tested the configuration, and shipped the products directly to the customer for installation. This saved the VAR hundreds of hours and thousands of dollars. In the end, our combined efforts resulted in on-time delivery with no complications and a satisfied customer.

Mac Flythe (PC4): One of our sales representatives accompanied a VAR on a sales call to a major end user. It needed a POS solution for a network of stores located across the eastern United States. Our representative worked with both the VAR and end user to put together the solution by integrating various components from our selection of products. This deal has already yielded more than $500,000 in sales for our customer.

Paul Constantine (ScanSource): One of our VAR partners had an opportunity to install POS terminals with their software at a mall-based retailer. This end user had 400 stores across the country, and needed two registers per store, but the retailer wanted a terminal that the manufacturer had just discontinued. ScanSource acquired enough terminals from the manufacturer to ensure terminal consistency throughout the three-month rollout. We performed the hardware integration, software application loading, and store setup. We even set up the store network and allowed the end user to dial in and check the system while it was still in our integration center. Then we packaged the systems in custom boxes and shipped the networks to each store. Once they arrived, the store personnel plugged them in and were fully operational.

Michael Smith (Telpar): A VAR working on a more than $750,000 opportunity contacted his Telpar VAR manager for her expertise and assistance. Jointly, they considered all requirements, determined the product needs, and scheduled a personal visit and demonstration for the customer. Because of the knowledge and proficiency in pre-planning, personal attention, and professional joint presentation, the VAR and Telpar effectively closed the deal with the necessary solution.