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It seems that IT distributors in the region now have an arsenal of e-tools to flaunt as they look to drive down costs and increase the ease with which resellers do business with them

Tags: ASBIS GroupAl Yousuf GroupAptec DistributionE-commerceEmitac GroupUnited Arab EmiratesWestcon Middle East
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Logging on Mario Veljovic, Aptec. (Valeriano Handumon/ITP Images)
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By  Andrew Seymour Published  August 11, 2009 Channel Middle East Logo

It's a not-so-heavily guarded secret that the Middle East channel lags behind other territories in the world when it comes to the volume of business and processes carried out online. A glance outside the region will reveal that leading distributors in some emerging European markets, for instance, now generate more than 60% of their sales through the web. Yet, distributors in the Middle East would count themselves lucky if online transactions represented a tenth of that figure.

The online purchasing model at a channel level has never really taken off in the Middle East for a whole host of reasons although that doesn't mean distributors are neglecting the advantages that e-commerce promises. In fact, most of the top players have made significant investments to develop e-tools that endeavour to facilitate day-to-day business and inspire customer loyalty.

IT distributor Aptec, which continues to lean more towards software and enterprise-led sales, regards a solid web-based offering as fundamental to its future. Its website allows resellers to access RMA applications, credit application forms and account opening documents among other things.

"A variety of forms of the distribution business can take place online - these include order processing and tracking, payment, RMA, supply chain management and much more," explained Mario Veljovic, operations and commercial manager at Aptec. "We have a full e-supply chain system, wherein our customers and channel partners can order products and these products can then be delivered to them online. We use this system for licensed products such as software applications that we distribute in the region."

HP distributor Emitac is another company that has spent a considerable sum of money developing a comprehensive online system to keep resellers in touch with the status of their transactions. The original portal it rolled out six years ago was discontinued due to certain inadequacies, but the company launched a new version with enhanced functionalities at the end of last year.

"Connect ED facilitates effortless order placing, processing and tracking. It speeds up order placement and delivery, simplifies order tracking and ensures real-time communication. Another online facility offered to customers is the job tracking system, which enables customers to get an update on their product repair status."

That is now being made available to all its customers following an earlier soft launch involving a handful of resellers. "The portal is called Connect ED and it is an online sales order management system offering unbounded advantages for resellers," explained Afsheen Beig, marcom manager at Emitac Distribution. "Connect ED facilitates effortless order placing, processing and tracking. It speeds up order placement and delivery, simplifies order tracking and ensures real-time communication. Another online facility offered to customers is the job tracking system, which enables customers to get an update on their product repair status."

Online mechanisms are already a common sight in the value added distribution sector, where VARs look to distributors for access to the latest technical and product collateral. Specialist networking and communications distributor FVC uses its online portal to list marketing materials, sales presentations, whitepapers and case studies.

"Our partner portal also includes an online ticketing service for support needed by both partners and customers," explained Dharmendra Parmar, general manager of marketing at FVC. "Once a support ticket is issued, it is tracked regularly until it gets resolved. Moreover, we also use online tools for web-to-web calls, video conference calls to update our partners on product launches, new technologies in the pipeline and the announcement of special offers."

Networking distributor Westcon Group offers its partners a wide range of e-tools, many of them adapted for the region after proving successful in other territories. One of the most popular aspects of its programmes has been a facility for resellers to monitor stock availability and order status.

"We have been offering access to view inventory and order status for some time now," said Steve Lockie, managing director at Westcon Middle East Group, which also counts the Cisco-focused Comstor brand among its group. "We actually have a ‘full blown' e-commerce capability, but have yet to see the demand to launch this in the region, not forgetting true EDI connectivity."

When it comes to electronic tools and the relationship that distributors have with resellers then the two haven't always gone hand-in-hand. Lockie remains one of the advocates for driving more business down the automated route, arguing that there is no limitation to the processes that can be carried out online.

"I am a huge believer in e-business rather than e-commerce, my distinction being that you can publish and transact many of your processes online with a distributor, just as much as we do with our vendors, and there are huge efficiency and cost savings to be had," he said.

That, though, is one of the conundrums facing the channel. Most distributors are business-linked to their core vendors, but yet the reseller interface lags a long way behind. Many resellers prefer the conventional ways of doing business, although distributors are working hard to convince them of the gains that can be made from exploiting e-commerce.

"Ready availability of information is the most important benefit of using online tools, while cost saving is another aspect," declared Veljovic at Aptec. "Rather than calling up people for information on certain products or promotions, our channel partners can now go to our portal and get the information themselves. For instance, if our channel partners need information on their statement of accounts, they can go online, download the invoices and process the payments. Today, the website is not the main tool to communicate with our channel, but very soon it will be. The channel will increasingly use the services offered through the web, as soon as they are available," insisted Veljovic.

"And it provides our resellers with higher visibility on their business with us."

It is clear that even if resellers aren't enthused about purchasing online, there are still plenty of initiatives they can embrace that will simplify the wider transaction process and reduce paperwork. "The tools that we offer also give them an edge over others by keeping them updated on their account status while giving them the latest updates on current promotions and stock availability," stressed Beig at Emitac. "And it provides our resellers with higher visibility on their business with us."

The extent to which the channel makes use of the web tools offered by the distribution community is a subject that has acquired extra significance in the current economic environment. Westcon insists online tools really come to the fore when prudence is needed.

"We have pioneered the use of webcasts in offering cost-effective channel updates and trainings to our partners across the MENA region," said Lockie. "This results in significant cost savings in terms of travel and time plus clear benefits from an educated channel. Of course, we still travel and conduct trainings in the region, but for mass updates this is a fantastic tool."

Not everybody thinks the economic downturn has put online tools on a pedestal, however. Veljovic at Aptec believes e-services are important regardless of market conditions. "I don't see a tremendous increase of utilisation of these online tools, especially during the current economic scenario. What was true yesterday is true today. What I have noticed, however, is that people have started using these tools on a regular basis to perform more jobs in less time," he commented.

It is difficult to talk about e-commerce at a distribution level without returning to the question of whether the channel will ever regard it as a serious avenue for purchasing products. Most dealers still prefer picking up a phone and speaking to their account manager - and, after all, online buying doesn't allow any room for negotiation.

"The main reason for that is the Middle East mentality of not buying a product unless bartering over the price."

"I don't think the channel in this region is structured in the right way for online buying - it will never be more than 5% of the business," said the boss of one hardware vendor operating in the Middle East. "The main reason for that is the Middle East mentality of not buying a product unless bartering over the price."

Epson and Viewsonic distributor Al Yousuf Digital observes plenty of advantages from online tools - particularly in terms of helping customers to track the progress of orders and shipments - but warns that it can never replace the traditional methods of doing business. It says peer-to-peer interaction is still needed to ensure the distribution and reseller channel thrives.

"Given the fact that profit margins in IT products are very low, we cannot define prices in advance and we need to negotiate prices directly and not with systems or websites," said Ahmed Qasem, general manager at the company.

"I believe the issue is with the structure of the region and not the companies," he added. "There are many companies that have got the infrastructure needed for such a step, but they seem to have put it on hold for now. The reason is that we face a challenge when it comes to purchasing online due to the customs regulation, particularly when selling to neighbouring markets. It is not like the European Union, which is considered one trading region. It might be possible among Gulf countries in future, but countries outside of this domain still lack plans for it to exist."

PC and components distributor Asbis has developed an online ‘b-to-b market place' where resellers can view real-time stock availability, configuration options and an extensive product catalogue. Hesham Tantawi, VP for the Middle East and Africa at Asbis, says the Warsaw-listed outfit has started working with the online portal in selective regional markets and suggests that it provides more scope for ‘price negotiation' than you might first imagine.

"Selling online allows customers to order products on a 24-7 basis, and once the required quantities are ordered, the order gets processed and a copy of that is sent to our warehouse to supply these quantities. The customer can even enter the required price and once the account manager accepts it the order is processed," revealed Tantawi.

In addition to customer reticence, there are other reasons why e-commerce uptake in the reseller channel has remained slow. Phone and face-to-face contact still rank as the predominant mediums, while bandwidth issues in certain countries have been known to prevent resellers from getting the full benefits of the services available to them.

Although distributors accept that resellers would still rather pick up a phone and place an order with a person, they are eager to point out that at least embracing some online initiatives will make their lives easier and free up time to work on other issues.

"Much more of the face-to-face time can be used for business development as pricing, availability, account status, invoices, training and many other processes are driven to the cloud," insisted Lockie at Westcon. "In fulfillment of low cost and low margin products, online tools may of course replace some face-to-face time, but these are not markets that we participate in."

Beig at Emitac agrees, arguing that e-tools are a means of increasing productivity. "They do not replace sales people, nor do they reduce face-to-face contact with customers," she said. "In fact, these tools help the sales team and the customers to close deals faster by enabling them to key in the order there and then without delay."

There is even an argument that using e-tools correctly will lead to more efficient business deals. Veljovic gives us an example: "For instance, when sales people engage in talks with prospective customers, they could speak about new products and services offered, rather than filling out sales forms and getting them approved then and there. They could then return to office and initiate these administrative jobs online. It makes life easier for both the sales person and the customer," he said.

Distributors are now weighing up how they can further strengthen their online offerings and gain a competitive edge over their rivals. Westcon plans to offer more e-tools that encompass new technology markets and geographies this year, while Aptec intends to relaunch its e-shop and roll out an online order and delivery tracking service. It will also unveil a customer communication dashboard allowing resellers to select how they would like to interact with the company, taking into account their preferences for text messages, personal account management and e-mail shots, for example.

"We certainly look at the viability of adding new web tools to our partner portal on a regular basis"

Elsewhere, FVC insists it is firmly committed to keeping its online capabilities updated and in line with the market's needs. "We certainly look at the viability of adding new web tools to our partner portal on a regular basis," said Parmar. "Currently we are working on adding lead management and distribution tools. These tools can assign leads to our partners and keep track of leads we generate. The partner portal also disseminates information on events we hold in the Middle East region."

Even if resellers in the Middle East haven't yet embraced the full gamut of online tools available to them, you can be sure that distributors will continue to push their worth until that situation begins to change.

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