Hail the age of Distribution 2.0

Dominic Whitehand, managing director of WhiteGold Solutions, said: “What we are terming is Unified Value Distribution, where you are bringing together the value of a number of technology areas, but you are still retaining true value, rather than becoming broadline only. You have got to have the skills, you have got to be able to support it well, understand what you are selling and be knowledgable on the products for people to take you seriously.”

Whitehand said the distribution market has seen a rapid change due to numerous developments in technology which has been released in recent years.

“There is a lot of converging and technology unifying, and that means a lot of the technology areas are coming into singular products which can cover a number of different aspects,” he said. “Instead of just picking storage or security [to distribute], everything is changing and a lot of new vendors are coming on the market. The key is to pick out the good vendors. Everyone saw the converged networks coming, but getting the right products is key to being a modern distributor, whether you are broadline or niche.”

However, Whitehand insisted that distribution has become more specific and niche in general, but broadline is still prominent, especially though various mergers and acquisitions forming fewer larger players.

“The real solution provider distributors, who are niche and really know their products inside out, have done well. The key is that you do have to diversify. If you are a niche distributor in one area only, you either need to be in the top two in the country or you need to diversify out to become niche in more than one area,” said Whitehand. “The advantage of niche is that reseller will get far better support from people who have probably had direct experience of implementing the product. Support and service is better and quicker with niche distributors.”

With broadline, resellers are usual going to get products to the right place, at the right time for the right price, according to Whitehand. They might get pricing advantages with broadline, particularly for some consumer products as broadline distributors consolidate shipments, giving them lower shipment costs and can then bring their prices down.

“You get a broad range of products, but at the expense of their staff being about to fully support those products to an in-depth level,” said Whitehand. “People are starting to understand the real value of the niche distribution model, but there is no way they are only going to stick with niche alone due to the multiple technologies in the market. So the industry is looking for distributors who have what they want across most of the hot categories like the obvious ones such as networking, storage, security and Unified Communications.”

Whitehand said the industry wants distributors who can provide most of what they need in those technology areas, but provide both pre- and post-sales support, plus implementation and professional services. “The distributors that position themselves to do that are going to succeed,” he added.

Case in point

To fully highlight the transition towards Distribution 2.0, it is worth noting the direction of two players that have clearly fallen into the two traditional distribution categories. Ingram Micro is Australia’s distribution giant, with huge turnover, staff figures and an unmatched vendor stable in terms of breadth. On the other end of the spectrum, a good niche example is Tegatech, a firm which claims to be Australia’s only tablet PC and ultra-mobile PC specific distributor.

Headquartered in Sydney, Ingram Micro Australia has offices in Melbourne, Brisbane, Adelaide, Perth and Canberra and distribution centres in Sydney, Perth and Melbourne. Speaking globally, Ingram serves 100 countries and claims to be the only global IT distributor with operations in Asia. In short, it is a distribution monster.

Stuart Ellis, general manager of the Ingram Micro Solutions Group, said: “With both resellers and vendors we position ourselves as having multifaceted capabilities. Our core business, which is no secret to anybody, is broadline around time and place and supplies chain efficiencies. However, we have also developed a niche and specialised model to ensure
that we can compete in other segments of the market. We do this by focusing on certain market segments with our business units.

“We base our overall business on the strength of our product portfolio in that we have a broad range of offerings in many different market segments. We then complement that portfolio with specialisation such as technical and business development and leverage that back to what we are strong at doing which is supply chain efficiencies.”

Ingram’s Solutions Group was officially formed in July 2006, with the firm planning the division for two years prior.

Ellis explained that Ingram’s 2004 merger with Tech Pacific was a “very nice marriage” which enabled the firm to build the dual niche and broadline capabilities it uses today.

“While a lot of distributors have picked niche areas, they are starting to diversify. You are seeing guys who have been in one particular market segment now popping up with a strange [vendor] appointment,” said Ellis. “We have been very clear on our strategy. Our Solutions portfolio is now making up 20-25 percent of Ingram’s overall revenue stream. The business units we have built around virtualisation, security, Unified Communications and business applications are well established, we are getting good traction with them, and we have a lot of specialisation within those units with consultancy services, pre-sales and technical support.”