Boxing clever

The boundaries of the Dubai-based distribution channel are being tested on a daily basis as the market's ‘middlemen' develop new ways of delivering value in an increasingly congested environment. But where will the modern-day distributor of 2008 need to focus their attention to stand the greatest chance of success in the Middle East? Channel Middle East editor Andrew Seymour reports.

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By  Andrew Seymour Published  January 12, 2008

I t might rank as one of the most volatile categories of the IT market, but distribution is a function that vendors and resellers could ill afford to be without. Whether it's supplying stock, running technical seminars or providing post-sales assistance, the role of the distributor remains the glue that binds together the manufacturers and their entire channel network.

Yet despite its importance, the distribution sector remains an unforgiving place where complacency is seized upon by the competition and inefficiency can quickly lead to financial disaster. Distributors striving for success in 2008 know they have to strike a fine balance between meeting the rising expectations of their vendor partners and providing resellers with the range and consistency of service they have come to take for granted.

Everybody is looking at the bottom line. Many people got hurt financially during the last few years. They were shaky years for everybody and that has resulted in a mentality change

These demands are leading wholesalers to adopt a more sophisticated and professional approach when it comes to managing their overall business in the Middle East. Many are assuming a tougher stance with brands that don't contribute to their financial health, while at the same time coming up with initiatives designed to develop the first-tier channel.

"I can sense today that distribution is really changing somehow and the whole dynamics of the market are changing," said Jacques Chammas, managing director at Mindware.

Venu Menon, sales director at networking specialist Online Distribution, insists contemporary distribution is much more about providing added value in terms of training and support, rather than mere box-pushing.

"The core functions used to be just logistics leverage whereas now the role has extended further to include strategic territory management, technical support, education, marketing, relationship leverage and credit leverage," he added.

The age-old argument of local versus regional distribution, which has taken a back seat in recent years, looks set to resurface during the next 12 months as a result of the differing pressures enforced on the vendor community. The prevailing need to reduce costs, but at the same time appear more competitive, is likely to culminate in mainstream vendors conducting business with fewer - but ultimately larger - partners in an effort to exploit regional economies of scale.

Smaller vendors endeavouring to penetrate the market, meanwhile, will lack the profile to fit that model, leaving them to partner with an alternative set of distribution companies.

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