E-commerce portals are not new in the world of IT distribution. Ingram Micro’s TechLink opened its doors to all resellers in 2006. While much channel business is still done over the phone, e-commerce has seen a renewed focus with the move to cloud computing and the attempt by many distributors to carve out a piece of the action.
With so much business now being done remotely, virtually and through automated ordering, where does that leave that cornerstone of sales – personal relationships?
Products that used to be bought physically, such as servers or storage, are now more commonly bought as online instances hosted in a remote data centre. The distie is no longer under pressure to shift floor stock to maintain sales volume, which means less incentive to go and negotiate with the reseller.
Resellers also have less bargaining power because cloud computing is typically consumed at fixed rates. There is some discounting for volume, but there’s not much benefit for loyalty.
Is the shift to cloud computing going to keep pushing channel business toward e-commerce, perhaps diluting the value of relationships? CRN spoke to resellers to find how often they were using e-commerce portals – both for traditional online ordering of product and the newfangled cloud marketplaces – and asked whether good, old-fashioned customer service was on the way out.
Easy and automated
Darryl McAllister, managing director of Sydney-based NetCare IT, orders more than 90 percent of products he resells through e-commerce portals run by Dicker Data, Synnex and Ingram Micro. “Their portals work really well,” he says. “We use them all day, every day. We don’t use the phone much unless we’re going for special pricing or it’s a larger bid. We’re very strong users of their online tools.”
The advantages of online ordering are fast access to accurate pricing. McAllister uses a tool called IT Quoter, part of the ConnectWise ecosystem, which pulls in feeds from each of the disties so the reseller can check on inventory, stock and pricing. NetCare IT uses it to prepare quotes for customers, but makes the final order through the online portal. “We have a very narrow, standardised product set that we provide to clients. We’re ordering the same HP UPS and servers. We just know those products."
But do these faceless interactions with a distie through online channels degrade the relationship?
“It improves it” McAllister says. “The fact they’re giving us the tools to prepare quotes is a bonus. We can get quotes out the door in five minutes,.”
NetCare IT has set up a highly efficient process around the three major disties that takes advantage of the speed of online transacting. If the reseller places an order with Dicker in the morning, the distie will ship the products from its warehouses in Kurnell to the client or to NetCare IT in Norwest Business Park by the afternoon. “Dicker ships to the client, sends us an invoice via email, we send it to the client and it’s done. It’s a really slick process,” McAllister says.
All the major disties have reasonably equal online solutions, McAllister adds. “Most of our business is with Ingram and Dicker, third is Synnex. You don’t need to look outside those major disties, really.”
For those 10 percent of Netcare’s orders that are larger or more complex, a phone call is required. Human interaction is essential to getting the right price. “Nothing beats the phone, absolutely,” McAllister says.
The personal touch
At least seven distributors added cloud computing services to their e-commerce efforts last year, including Westcon, Ingram Micro, Dicker Data, Distribution Central and Avnet. The increase in online-only products will inevitably shift more interactions to the e-commerce portal.
One of the few major disties that didn’t make a big cloud portal announcement in 2015 was Synnex, which is hailed as the classic high-volume, low-margin mainstream distributor. While the company did relaunch its e-commerce portal in 2014 and it is understood a cloud announcement is imminent, Synnex has been investing in the opposite of automation – personal relationships.
Synnex “has been in relationship-building mode”, says Angus Mansfield, sales director of Sydney managed services provider XCentral. The company has increasingly shifted business to the distie. In the past couple of years, Synnex has moved away from its heritage as a low-touch components specialist and tried hard to shake its old image, Mansfield adds.
“We met Ahmmad [Issa, Synnex commercial sales manager] at a CRN Fast50 event and from that point on they tried really hard to engage with us, more than the other disties,” Mansfield says. “They won a fair chunk of our business as a result. “
XCentral still prefers the online portal for transactional items but relies heavily on the distie for advice on more consultative sales such as licensing and software. “The perfect position for the distie is to have the systems behind them and the right people in front. Some of the other disties have the systems but Synnex have the people.”
While the quality of relationships has made the difference in winning his business, Mansfield says it’s important to strike the right balance. “The risk you run on the relationship side of the business is if those people leave, you put the efficiencies you’ve built at risk.”
Good relationships have a real dollar value in the channel. One critical aspect of sales is to maintain momentum. A good distie that gives a reseller quick answers can make the difference between winning and losing a deal. “When we email or ring through we don’t feel like we’ve joined a queue,” Mansfield says. “We have great relationships with all our disties. But you do look for hunger and a real eagerness to do business."
Next: Getting a better deal
Brendan Major, director of Canberra’s MIT Services, ranked No.5 in the 2015 CRN Fast50, relies on Dicker and Ingram Micro for most of his purchases. Ingram’s e-commerce marketplace is “relatively good”, he says. “It’s full of information, but you if you ring you get a better price. That’s pretty much true for every distie. They have a standard online reseller’s price, but when you call and say, ‘I want five, can you give me a better price’, you get a better price.”
While everyone has an e-commerce portal these days, not all portals are equal. Some are harder to search, others can’t suggest relevant matches, Major says. If you order one component of a solution on the Ingram portal, it will tell you the others needed to make it work.
Beyond its e-commerce site, Ingram used 2015 to make some major headway with its cloud marketplace, and claims to have reached 1000 Australian channel partners using the system by the end of the calendar year. The marketplace leverages a global platform built on a Parallels system. In fact, late last year Ingram acquired the intellectual property behind the Odin platform, adding 500 staff and effectively shutting out potential competitors from using the marketplace technology.
While Ingram has invested heavily in cloud, the distie has also improved its offline presence in the past six months, Major says. “They have realised you can’t rely just on cloud.”
Dicker has done the same. Both disties have spent up on local resources to make sure there are people to help design solutions or negotiate deals.
On the other hand
Some distributors have shown little interest in cloud. For those primarily centred on hardware, such as printing, it wouldn’t make sense. E-commerce sites are enough. Printer reseller EFEX Group sticks with just two disties, Alloys and Dynamic Supplies, for multi-function printers, photocopiers, parts and consumables. Neither sells cloud computing services. EFEX chief executive Nick Sheehan says he’s happy with how business has always been done.
“Our business is very relationship-based,” Sheehan says. “Having that same approach with disties has served us well.”
The decision to limit business to two distributors is connected to the way in which EFEX does business. “The big advantage of dealing with a smaller number of disties is that you get a better level of service because of the loyalty you show,” Sheehan says.
EFEX does place orders through Alloys’ web interface, but these tend to be small jobs where there’s no leverage on pricing. Many of EFEX’s orders are larger and complex in terms of the number and type of products. If the reseller wants special pricing, it has to be done over the phone.
One reason is that a web platform will have a limited set of variables that relate to the mix of stock and the size of the order. The reality is that distributors work from a broader set of intangibles that reflect the nature of a high-turnover business. Those intangibles push buttons for resellers looking for a better price.
“You’re far more likely to do a deal on a slow-moving line than a fast-moving line,” Sheehan says.. “That’s very hard to do if you’re pushing stuff through a web platform. That hand-to-hand combat will always be there, in that instance.”
Does Alloys have plans to add a full-blown e-commerce portal like other players? “It’s not our preference to go that way,” says chief executive Paul Harman. “We need to grow the capabilities of the SME channel through training, demos and putting together solutions. I haven’t found a way to do it in a virtual space as well as in a physical space.”
Harman’s position is partly based on the readiness of Alloys’ customers to move to negotiating online. “I still think decision-makers in the SME channel are more hands-on and real conversations are more effective.”
Disties that specialise in physical products that can’t be virtualised, such as printers, will probably be some of the last to migrate to online marketplaces. Resellers need demonstrations of mechanical products to understand how they operate and how to educate customers on the ways to use them.
Resellers often lack enough staff to know all the products in detail, which is where disties can step in with advice and expertise, Harman says.
Alloys’ staff spend a lot of time explaining products to resellers in showrooms, during training and events or in conversation.
Harman says it’s likely this style will change over time for some products. It has already for consumables, which are more commonly transacted over the web.
“I think you have to provide the best of both worlds – face-to-face relationships and [the ability] to place orders when you want to do it,” Harman says.
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