Stuck in the middle, distributors must prove their value to resellers and vendors alike

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This article appeared in the November 2017 issue of CRN magazine.

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Stuck in the middle, distributors must prove their value to resellers and vendors alike

COMMENT  |  Today, we reveal findings from our landmark research into Australia’s IT distribution sector. Almost 400 channel leaders took part.

We have sliced and diced the survey into two groups: resellers and vendors. As you can see from the results, they have significantly different demands. No wonder disties often feel squeezed.

Having pored over scores of data points, hundreds of responses and thousands of comments (literally), what were my key takeaways?

Many respondents were positive about the important role disties play. They offer an aggregation point, a single invoice and a centralised contact for procuring and configuring technology. Many resellers praised disties for holding stock and ensuring fast delivery.  Vendors offered kudos for credit facilities, which are integral for getting deals across the line.

But the survey results also indicated a lot of room for improvement. Vendors want distributors to improve enablement and product knowledge. They want distributor staff to be better educated.

The data also shows how resellers and vendors are split in the demands they place on distributors.

For instance, while both groups agree that pre-sales support is one of the top three most important factors when choosing which distie to work, they also have competing priorities.

Among channel partners, price and product availability are the two most important factors when choosing a distributor. Among vendors, enablement / product knowledge and marketing support are the two most important factors.

The distie is in the middle, being pushed by vendors to invest in more high-value services while also being squeezed by the reseller to offer the best price. Doing both is not easy!

When asked where distributors should focus and improve in the next five years, again the two groups had noticeably different recommendations. Channel partners want to see more emphasis on genuine reseller relationships. They suggest disties should focus on improving their customer service and get the basics right: responsive pre-sales support, stock availability and on-time delivery.

Vendors, on the other hand, tell distributors to focus on cloud services. They recommend better API integration between solutions and into vendor marketplaces. They say distributors should be the aggregation point for cloud services. Vendors also suggest distributors should introduce more added-value services, such as training and implementation, and they should also specialise more.

Price sensitive

Pricing was a concern among vendors and resellers alike, but for different reasons. Vendors told us they worried about competition and wanted to ensure disties don’t price-gouge.

The reseller tier is incredibly price-sensitive. Among channel partners, price was listed as the No.1 area distributors could improve. Many channel partners told us they would shop around to score a few extra points of margin or to avoid losing a deal.

Smaller resellers can feel ignored by distributors, who they accuse of paying too much attention to larger partners. This seems a big missed opportunity – today’s emerging reseller could be tomorrow’s key account. I have seen concrete evidence of this time and time again through the relationships built at the CRN Fast50.

There is also a sense of resentment among resellers over a perceived lack of transparency in pricing. They want to know why there can be such great disparity on the same product from multiple distributors.

Asked where disties should direct their focus over the next five years, vendors and resellers were split. Vendors say they should focus on cloud, APIs, as-a-service models and digital integration. Resellers want disties to focus on their core offer: customer service, pre-sales support, stock levels, faster quotes, speedier deliveries and, in particular, relationships.

Steven Kiernan is the editorial director of CRN

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