Sub-distribution belief

The IT distribution sector has been severely affected by the slump in global PC sales, but there are some distributors that have managed to stay ahead of the game.

Tags: EZY Infotech
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Sub-distribution belief Mishra says there are enough opportunities to sustain business in the sub-distribution segment.
By  Manda Banda Published  November 30, 2013

The IT distribution sector has been severely affected by the slump in global PC sales, but there are some distributors that have managed to stay ahead of the game. Somkant Mishra, general manager at Ezy Infotech explains how the company has curved a niche in the market with its sub-distribution business model.

The sub-distribution model in the Middle East IT channel has often been viewed as a dying model with limited growth opportunities for the players involved at this level. However, focus and prudence in selecting key regions has seen this segment of distribution dramatically pick up for savvy players that have carefully selected the brands they represent and the markets to target.

Since inception in August 2007, Ezy Infotech FZE has concentrated on taking care of the bottom line than pushing the top line. The company says even though the existing situation on the ground at the time of setting up the company was not very encouraging, it has successfully managed to build a solid business from working with vendors that wanted to grow their market share in CIS, North Africa and the Levant region.

“The business model we currently have is more on a sub-distribution arrangement, than a full-fledged distribution model,” said Somkant Mishra, general manager at Dubai-based Ezy Infotech FZE. Mishra said although the company has signed up with Lenovo for the Pakistan market only, going forward the company wants to see, what value-add it can bring for any manufacturer or vice versa before agreeing to work together.

Mishra said the company has always fulfilled the numbers desired by vendors over the years. “We have been successful in growing the market share for some of the brands we work and have worked with, in the region,” he said. “The current political and economic situation in the region has forced many companies to make some changes as far as their operational structure is concerned and we are not an exception.”

He pointed out that the company has been relatively conservative considering the many variables that companies with a sub-distributor have to consider. “At the moment our core objective has been to avoid any bad debt as well as keeping pace with the changing market and business dynamics,” he said.

Mishra said the company has been tracking the business changes taking place in the region as this has a bearing on product buying patterns. “We work closely with resellers to ensure that they are supplied as per end-user requirements. We initially were more focused on the components and peripherals business, but have gradually moved to embrace the finished products,” he said.

Mishra said since Ezy Infotech doesn’t have direct vendor alliances the support it gets from vendors comes in terms of back-end rebates after achieving the agreed numbers and targets set.

So is there room for companies that have a sub-distribution model to grow their business to profitability? What is the value proposition that Ezy Infotech is offering its channel partners?

“To be honest, I sincerely feel, there are adequate opportunities to sustain and grow our business in the long run, if we conduct it in a structured, efficient and speedily manner,” he said.

Mishra said in terms of channel initiatives, the company has been more product-centric for different channels and it continues in the same manner. “We have not been offering everything to everyone and that is what has made our model to succeed where others have failed,” he explained.

He added that traditionally the company has been quite strong in the CIS and North Africa region although changes in customs laws in CIS and instability in North Africa has affected business.

The overall market conditions are challenging and at present the Middle East PC market like elsewhere around the globe is witnessing a squeeze in sales.Mishra said despite these market hardships, business in the GCC, Levant and typical with the traditional re-exporters in UAE has remained solid and that’s where the company has been focusing its effort this year.

“Despite these challenges, we have focused more on enhancing our re-export channels and that has paid off for us as we were able to cushion ourselves from the market uncertainty,” he said.

“The channels we are catering to and partnering with are mostly intereated in buying for re-export to Africa, CIS and Western Asia region,” he said.

Mishra explained that in terms of channel initiatives, the company has been more product focused for different channels and will to continue for the rest of this year to cement its business. “Even though we have partnered with resellers that have a trade mentality, we haven’t been offering anything and everything to them because that model is a recipe for disaster,” he said.

He said that is why the company has not been exposed or affected by resellers running away with unpaid debts because it has been relatively conservative when forging alliances with them.

Looking ahead, Ezy Infotech is currently working on some incentive programme, which is yet to be implemented. “We need to see the viability before we can roll out this initiative to all our channel partners,” he said.

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