New kid on the block

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This article appeared in the Issue 178, 8 August 2005 issue of CRN magazine.

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Ever wondered how vendors decide to enter the Australian market and look for resellers to help their market-making push?

"Somebody will say, 'I’ve always wanted to live in Australia'," says Kevin Joyce, general manager of Aexus, a company that helps IT vendors develop new markets. "They decide we’re a better cultural fit than an Asian office is. Or an executive will say, 'I hear the weather is nice in Sydney and the beaches are good so perhaps we should sell there'.

"It’s either that or a reseller or customer is a catalyst. A reseller will contact a vendor through their website or an end user walks up to the vendor at a trade show and says they need it immediately."

Whatever the catalyst for the decision, the vendor in question quickly opens an Australian office and starts to prospect the local market.

If they were fortunate enough to be approached by an end user the size of Telstra at the trade show, the vendor in question makes sufficient profit to fund a complete local office. Others will simply come to Australia, sign dozens of resellers and watch as nothing is sold because resellers have no risk associated with doing nothing.

Smarter vendors are more discriminating in their choice of local partners and use companies like Aexus to research the local market in terms of demand for the product and the presence of local resellers capable of meeting any demand. "In a typical due diligence when we take a product on you need to explain it to everyone you know in that area of the market," Joyce says. "We visit customers, resellers, industry experts and spend a lot of time in coffee shops and boardrooms," an exercise that takes three to four months.

Others vendors use agents to open our market, a process that Joyce says sees a vendor spend at least $100,000 to fly the agent to the US for training, then pay for several months work and follow-up visits from offshore salespeople and executives to close the first deal.

However it is conducted, the process quickly reveals a product’s prospects. "If you can say it makes high margins and is being raved about in North America, you are in with a chance," Joyce says. "If you do not have an extremely good story you are just another product and finding someone to take your product is very hard indeed."

Aexus' Joyce
Aexus' Joyce: Ideal resellers show niche ability

When the story generates interest, Joyce then has the luxury of getting picky with his choice of recommended resellers. "The ideal reseller is someone that can show niche ability," he says. "Vendors know that the only time anything is hugely successful at minimum cost is when there is a niche player." Specialisation is therefore his main recommendation for resellers looking to take on new products.

"If you come to me as a reseller and you only sell into one market, I’m happiest," he adds, recalling one particularly successful product intended to manage blood samples for pathologists with such a small potential reseller pool that the selection could be achieved in minutes. Another product he handled succeeded because fewer than 500 local organisations used the computers on which the software could run. The tiny pool of resellers catering for their needs could quickly reach the entire market.

Resellers looking to attract offshore vendors entering our market therefore need to understand the dynamics of our IT industry and tailor their businesses accordingly.

Selecting new markets:
what to consider
  • Specialise in a product/ market area
  • Cater for verticals to quickly reach the entire market
  • Understand the dynamics of a market when representing offshore vendors
  • Vendor enthusiasm can sometimes outweigh the resources they are willing to commit
  • Persevere and have the courage and willingness to learn

"Vendors will look at Australia and say it has a huge Federal Government market, a big health market and a good education opportunity. The best resellers are the ones that understand the industry a vendor is trying to sell into. Why do you think big companies have vertical sales reps?"

But even niche resellers, Joyce says, should not assume success is assured because vendors’ enthusiasm can sometimes outweigh the resources they are willing to commit to their local push.

"Asia Pacific is 10 to 12 percent of the global market and Australia is lucky to be 3 percent. And we are in the wrong time zone for the Europeans and the Americans.

"To make it work you need all the tech support they can offer."

And as the real experiences below illustrate, you will also need perseverance, courage and a willingness to learn.

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