VAD expedition

Regional distributor Unatrac IT distribution is aiming to reshape the value-added distribution market with a range of channel initiatives aimed at raising the company’s value solutions credentials.

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VAD expedition Hamdy says Unatrac has entered into the VAD space by adding vendors that have offerings in this segment.
By  Manda Banda Published  December 12, 2013

Regional distributor Unatrac IT distribution is aiming to reshape the value-added distribution market with a range of channel initiatives aimed at raising the company’s value solutions credentials, writes Manda Banda.

From inception five years ago, Unatrac IT Distribution FZE has been transforming itself from a well-known Dell hardware distribution powerhouse into a value-added distribution (VAD) brand that is aiming to reshape the regional IT distribution landscape.

For channel partners, Unatrac presents a rare proposition: a play on the Middle East and North Africa’s long-term growth; an IT distributor that is gaining scale, share and profitability, even as it transforms itself into a full-fledged VAD and provider of high-end IT services. That puts the company on the cusp of a change that will bolster margins and returns for the vendors whose IT solutions it represents and reseller partners it serves.

On its part, Unatrac’s transition from pure play commercial broadline products distribution into the value solutions space couldn’t have come at the right time given that the $200bn global PC business is now fading.

The company has been busy behind the scenes strategising as it attempts to transform from a commercial hardware distributor into a business focused on providing value-added solutions to the regional channel. If successful, pundits say the distributor, which is part of the Mansour Group, one of the largest conglomerates in Egypt, will power up revenue growth and help the vendor brands it distributes to capture new business in markets never imagined before.

Sherif Hamdy, product owner, Unatrac IT Distribution FZE, said the company started its operations in the Gulf region five years ago after signing tier one vendor brands. Hamdy said following the political turmoil in Egypt that started over two years ago, the company decided to diversify its portfolio and develop a long-term strategy that puts value-addition at the core of Unatrac’s offerings to the channel. “We signed HP a year ago here in the Gulf as we started our journey to become a VAD,” he said. “We believe this push in the value business will help us to start earning healthy profits for the company and our partners.”

Hamdy pointed out that the volume hardware space has continued to be a tough play for distributors as there aren’t huge margins to be made. “We have decided to journey into the value-add solutions arena by adding vendors that have offerings in this segment especially now that cloud offerings are receiving so much attention in the region,” he said. “In addition, we are looking for enterprise focused vendor brands that will not only complement our existing array of solutions, but open doors for us to venture into new verticals.”

Hamdy explained that having the regional headquarters in Egypt has created challenges for Unatrac given the prevailing political climate. “Our challenges over the last couple of years with the revolution there, has compelled us to expand our revenue base to other markets in the Gulf region,” he said.

He added that this is the main motivation why Unatrac has embarked on a plan to diversify into the value solutions selling segment. “What has encouraged us to move now is the knowhow, longevity in the market and the solid alliances we have with our reseller and vendor partners,” he said.

In the past 10 years, Unatrac has been a distribution partner for brands like Microsoft, HP, Dell, Fujitsu, Fortinet, Nortel Networks [now Avaya] and 3Com [now HP Networking]. “We have long-term alliances with all our vendors and remain committed to meeting our numbers. The revenue of the group is growing and this is largely due to the expansion of our business operations into other markets in the Middle East and Levant region.

In 2014, the company is moving into a new 40,000 square metres warehousing facility in Dubai’s Jebel Ali Free Zone for the whole group not just the IT distribution arm.

According to Hamdy, this has been done to cut expenses and to get all the subsidiaries within the Mansour Group housed under one roof. “We believe this will lead to the company growing its revenue after augmenting our product array. We are also looking at signing tier one brands in Saudi Arabia and UAE.

Having done $160m in sales in 2012, Unatrac is aiming to hit $170m this year and the company says it is on track to achieve this. “As we transition into the value space, we want to acquire distribution rights for storage infrastructure solutions, expand the current security solutions portfolio and enhance the networking array. We are also looking to bring VoIP and video conferencing solutions,” he said.

Hamdy said because Unatrac already has a base and certified technical team in Egypt, it is planning to implement a similar model for its operations in the UAE and KSA market. “Our plan is to strengthen our existing security and networking credentials and bring on board a top storage player,” he said. “We also want to increase our solutions offerings by broadening the product lines with our current vendors.”

He explained that the plan is to get a top notch vendor in the virtualisation space and complement that with solutions that are targeted at the cloud segment. “In the first half of 2014, we will have acquired at least two new brands,” he enthused. However, Hamdy emphasised that the company is also approaching its changeover into the VAD space by increasing value solutions from the existing product lines. “For example with Dell, the company has broadened its array following the numerous acquisitions in the last 24 months. We are looking at getting the SonicWall portfolio and for us this is incremental business with a solid product array that has healthy margins for Unatrac and our channel partners,” he said.

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