Have you ever stopped to look at the amount of distributors regionally?
It’s a completely different story in one region to what it is in another region.
In the US, you can count them on one hand (Maybe I’m exaggerating there… Maybe it could be done on two hands though).
In Europe we have about 150 distributors
In APAC, there is a large collection of them
LATAM, again, has a large number of distributors
So why the difference?
It’s down to the way that business is conducted. In the US, the value add initially was the ability to hold stock and distribute it around the country with ease. That was their value that they brought.
In the rest of the world, if a vendor wants to break into a market, they have language as well as that logistical piece to contend with.
The added value of the European and rest of world distributors has always been there, even in the days of hardware heavy vendors.
There wasn’t a need for transformation for these distributors as they always were a true extension of the vendor organisation.
So what’s all this talk about about distributors needing to transform?
The view is of a US perspective. It is completely true that the large, global distributors need to do more than what they have done in the past and to some extent still do. The talk of them having to transform into a platform is because that is where the new value will come from in a software led world.
Their reach is going to be the new value and the ability for that reach to purchase directly from a software distribution platform.
This essentially transforms those traditional, legacy, global distributors into a marketplace of solutions which in turn earns them margins for their utilisation of technology as well as their partner reach. This is the way that those global players can add the value.
The small to mid range distributors who reside in specialised markets don’t necessarily have the revenues and resources to create their own software delivery platforms or marketplaces but do they really need that?
When they have the key to the door with their cultural and linguistic knowledge within the market, does that not bring value enough?
Ease of transaction with the partners is important but if they are managed by the distributors, they have can easily do business anyway. Orders are fulfilled and managed by those specialist distributors on the ground.
Creating a marketplace isn’t something that is front of mind for the specialised distributors around the world and they don’t need to transform from what they have previously done.
Is traditional distribution dying?
We don’t believe so. Many people are saying that traditional distribution is living on borrowed time and if they don’t transform, they will no longer be around.
I would like to see vendors try to break into emerging markets without a distributor in place.
Employing people directly who speak the language can be done but is this really scalable?
We work with around 75 distributors around the world who have Channelyze accounts through the vendors that they work with and it doesn’t look to be getting any quieter with new ones added on a regular basis.
The tools haven’t been there
There has been a disconnect between the distributor and the vendors for years with it causing visibility problems and smoothness of doing business across multiple tiers but that has now stopped.
The companies that have focus on that distribution layer are enabling those distributors to bring yet more value to the table. Complete visibility, connected relationships, ease of training and enablement, the list could go on.
Summery
Distribution is not dying. It’s just evolving. The ones that need to evolve are the ones that don’t add the value and only fulfil orders.
To break into emerging markets, distributors are key
You don’t need distribution in the US!
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