As the market jockeys for position - with vendors pivoting at scale and partners at speed - distribution is assuming a new role within the channel.
While traditional functions still remain, such as logistics and financing, the supply chain is evolving in response to new technologies, customer demands and market dynamics.
In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel.
Yet before such a role can be undertaken, distributors in Asia must also differentiate.
“Distributors are faced with ever increasing vendor compliance whilst operating on ever decreasing margins,” observed Scott Frew, founder and CEO of iasset.com. “Simultaneously, they have to differentiate in a very crowded market.”
According to Frew - leveraging more than 35 years of channel experience - distributors today must leverage automation to capitalise on a changing ecosystem, with a change of business model required to drive growth and become "addictive" to both vendors and partners.
“Addiction is not solely about the products they offer and how quickly they can ship them to their destination, or how they manage consumption-based vendors,” Frew said. “Instead, it’s more about the services and support they can wrap around traditional functions that will set them apart.
“Whilst most distributors have heavily invested in providing pre-sales training, order fulfilment, sales and technical assistance for value-added resellers and service providers, there is a whole lot more they can do to add further value up and down to all of their partners.”
Specific to value, Frew stressed the importance of maximising “every opportunity every single day”.
“As an intermediary of data flowing from end-users to resellers, then through to vendors and data coming back down the other way, distributors have access to an extremely valuable resource,” Frew added.
How distributors decide to act on this resource will determine whether or not they are perceived as a strong partner within the channel, according to Frew.
“If distributors ignore this opportunity or rely on others such as vendors to run their data for them, they are doomed to fail or certainly destined never to grow their vendors faster than the general market,” Frew advised.
“With this data, the appropriate platform and streamlined processes, they can enable partners to grow not only their recurring revenue streams, but increase up-sell, cross-sell and end of life opportunities.”
With more than three decades of channel expertise, Frew speaks with authority on distribution having founded two market leading distributors in Australia, namely LAN Systems and Distribution Central.
Founded in 1990, LAN Systems evolved into one of the largest network-focused distributors across Asia Pacific, before being acquired by Datatec in 2000, and then rebranded to Westcon-Comstor.
Through Distribution Central, founded in 2004, Frew created the sixth largest distributor by revenue in the region, housing over 160 staff with revenues exceeding $520 million, before being acquired by Arrow ECS in 2016.
“I have competed with all of the global distributors and some regional ones and yet, I have managed to build multiple value-added distributors from scratch and grow faster than any competitor,” Frew added. “How did I do it? It was always all about the ‘fries with the burger’.
“I mandated our processes using our iasset.com configurators for net new sales, to obtain 100 per cent for maintenance attach for every order.
“I then added the suggested ‘fries’ in the form of - do you want headsets with the phone system? Rack ears for those big switches? Someone to install that complex security product? Staging? Advanced replacement options?”
Such a move, said Frew, created a "huge installed database" that could be mined, alongside recurring revenue opportunities that arrived ahead of the market.
“My competitors got so smashed on renewals, they would simply say to resellers, when the iasset.com quote comes out, call us we’ll beat their price,” Frew said. “A reseller can only do that to a distributor once, then they will lose track of it for next year for the cheaper price.
“At the next anniversary, our instance of the platform would alert us to the opportunity again.
“That means we could either go back to the reseller that bought from the cheaper competitor to win them back, or we could approach a more closely aligned partner to close the sale.”
Frew said the iasset.com platform offers distributors the ability to proactively manage all product lifecycle opportunities, in addition to providing the "differentiator required" to demonstrate true value in today’s competitive environment.
“With iasset.com, distributors can integrate and automate the management of all of their revenue opportunities from cradle to grave, whilst concurrently reducing costs,” he added.