Profile: Distribution Central's second coming

Distribution Central may seem yet another distributor chasing the high-end technology vendors and their resellers, but this one is headed up by a duo well-known to the channel.

Scott Frew and Nick Verykios bought Firewall Systems in 2004 from its founder John Labza who had built the distributor up over the past 12 years to become Watchguard's most successful partner.

Distribution Central is the pair's second bite at the channel cherry. It took them 10 years to found, build and sell distributor Lan Systems in 2000, which netted enough money for Frew to temporarily "retire to Belgium" and boat around  the Mediterranean.

The lure of the channel drew him back into the game, and this time Frew is doing it for other reasons than the desire to retire a second time, as he claims.

Distribution Central's goal is to find problems in distribution, overcome them and make a heap of money while doing it. So far it looks like Frew's formula is working.

The meeting rooms in the St Leonard headquarters are named after his favourite Mediterranean ports, Monaco, St Tropez, Cannes, Antibes and Portofino.

Verykios laughs at the Europhile pretensions. "They could call it Port Macquarie for all I care," he says.

But why choose ports in Europe?

Frew's office is modest enough; the most unusual aspect is a string of framed $50 or $100 notes.

Each represents a bet that Frew has won against colleagues and friends.

Some wagers were for hitting high targets or signing unlikely vendors; others were more private.

"And this one . . . I can't tell you what this one was for," he grins.

The warehouse is modestly sized and far from full on the day CRN was there. Many vendors today subscribe to the zero-stock principle and ship on demand. A line of pallets along one wall represents the stock for DC's Advanced Hardware Replacement program, which Frew says was missing for vendors of high-technology products.

When a critical part of infrastructure, say a $10,000 firewall, fails, resellers can't expect their customers to wait until another ships from the vendor's US warehouses. However, distributors have been reluctant to hold stock that isn't for sale, says Frew.

"The main reason distributors don't do [hardware replacement] is because they don't have pre-sales to know whether the box can just be plugged in," says Frew. However, it makes more sense for distribution to handle replacement stock because they are in the business of moving boxes, he adds.

Frew initially outsourced warranty replacements to a third party but brought it in-house as a value-added service that was not only cheaper but which he could guarantee service levels.

And it was another point of difference for Distribution Central which it could post as evidence of its full-service approach for vendors.

At least one vendor has signed on because of the Advanced Hardware Replacement service, says Frew.

Frew is clearly a guy who doesn't like to deal with a problem more than once. The distributor has several hallmark ideas that show an inventiveness for reducing daily chores.

For example, Frew found test products were never returned in good shape. So he had airline-quality, foam-packed metal cases made with an inventory pasted inside the lid listing every cable and dongle in the case - along with the replacement price for each one.

Each case is checked on return and resellers billed for missing or damaged parts.

Rean on for more...