Distribution has often been painted by its critics as the channel’s unnecessary tier. Few would dispute the value of distribution’s core functions of pricing, availability, credit and logistics on traditional, high-volume products. But when it comes to engagement with smaller or emerging vendors, some have viewed it as the redundant rung in the supply chain.
If a reseller has the technical and marketing ability in-house, why should they be forced to hand over a margin cut to a third party they view as adding little value? And why would a manufacturer want to add more cost to their supply chain than they need to?
However, with resellers less willing to take risks and vendors running short of manpower, distribution is proving its worth once again. “The hard times have forced some resellers to slash in-house resource, and because resellers do not want to take on new vendors, distribution is picking up the slack,” explains Simon Campbell-Young, CEO of specialist distributor Phoenix Software.
“Distribution has a more powerful role to play in the current climate, and resellers are once again seeing that often new products are not viable without the support distribution provides. This validates the role distributors play.”
This backdrop has provided fertile ground for growth in those specialised companies that are filing the niches in the channel. “We have had to act as a proxy or risk mitigation service for the VAR, but similarly we have had to help the vendor scale its go-to-market plans,” adds Campbell-Young. “But it’s a two-way street, with resellers realising that they have to put at least some skin in the game. They have to put their money where their mouth is, as the quicker we can transfer knowledge and/or product, the more independent they can become and the more we can scale the vendor’s operation.”
Resellers are having to spread their technical resource thinner and thinner as more products and technologies come into play. Campbell-Young says that if they do not tie up a trusted relationship with a distributor, they will end up being very shallow across a number of disciplines.
“There is a need to be very careful about who and how we bring to market, as the market is much more volatile these days,” says Campbell-Young. “Resellers have a vital role to play in the channel, but distribution is the key to keeping everything moving in the right direction.”
Simon Campbell-Young, CEO of specialist distributor Phoenix Software