Where is the value

Do the region’s value-added distributors bring real value to the deal, and what services are really needed by the channel?

Tags: Avnet IncorporatedDespecEmitac Distribution LLCUnited Arab EmiratesWestcon Group Incorporationhelp AG (www.helpag.com/)
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Where is the value Abdalla Mustafa, sales director, Emitac Distribution.
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By  Piers Ford Published  June 22, 2011

Distribution and value-add have not always been the easiest bedfellows in the IT channel. On the one hand, providing expensive and complex additional services seems to fly in the face of the basic traditional function of distribution – to fulfil demand for commoditised products.

On the other, distributors must scrap for every ounce of fat in an intensely competitive market, and many of them see a smartly conceived portfolio of added-value services as a sure-fire way to snare the hearts and minds of their resellers.

From marketing programmes to credit facilities and lead generation, distributors in the Middle East are increasingly taking on the added value challenge and in many cases find themselves offering services and initiatives that were once largely the preserve of vendors. But what value are they really bringing to the typical deal in the region? Some VARs are decidedly sceptical.

“The only reason a vendor has a distributor or VAD is to distribute the products,” says Stephan Berner, managing director at security reseller and systems integrator help AG Middle East.

“Vendors don’t want to have a large back office, administration and logistical services that cost a lot of money. The distribution model as such has been invented by the vendor to take off the burden to scale within global markets including the Middle East.”

Berner says that unlike many VARs, help AG aims to be self-sufficient in terms of local technical and marketing resources, although it is also well equipped to make full use of additional marketing or lead generation facilities that a distributor might offer.
“For me, value-added services simply mean executing basic work functions and being able to provide quality,” he says.

“If I work with a distributor who is making things harder by slow responsiveness, non-qualified information or no validation of information, I look for a distributor who makes things simpler. Today, some disties claim to be VADs but ultimately they don’t have the skill set and capability to execute. Distributors are into mass-market business and it is important to sell as many products, as fast as they possibly can.

“How many qualified leads did we receive from a distributor in the last year? Maybe one. In any case, the number is too insignificant to even consider. At the end of the day, it’s all about setting the correct lead generation criteria. The situation is improving, as five years ago the concept of a ‘qualified lead’ did not really exist. Nevertheless there are examples of good distributor initiatives, like Computerlinks investing in its in-house telemarketing to support their resellers. If managed correctly, this will be useful and used by their channel.”

Financial services is one of the fastest growing value-added strands in distribution but Berner says it will be another two or three years before things like leasing services start to deliver real benefits for resellers.

“To demonstrate the importance of this today, if a VAD offered us 90 days payment terms instead of 45 days standard payment terms, we would be happy to disclaim 2% of our margin.”

But if commentators like Berner remain underwhelmed by distributors’ value-added efforts so far, the leading players in the region are bullish about their own claims to bring something extra to the table, and to set themselves apart from competitors by defining what adding value actually means.

“Basic services such as credit line, stock availability and even pricing support are very much value-adds that all of our customers thanks us for,” says Steve Lockie, group managing director at WestconME Group – WestconME and ComstorME.

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