Cut The Distis Some Slack

In recent times, distributors have come under fire for encroaching on the
channel's customers, signing up service contracts, forming cartels etc. They

have been made out to be the ogres of the channel community, looking out for
their next victim partner.

I am not sure how much of this anger, targeted at the distributors is
justified. Agreed, they have their faults. But the facts remain that the channel
needs them as much as they need the channel. Keeping this in mind, it would be
suicidal for a distributor to take steps that will alienate him from this core
customer-the channel.

At the various IT Panchayats organized by DQ Channels and The DQ Week, we
have seen a very good turnout from distributor companies. The participants
include Ingram Micro India, Redington India, eSys Information Technologies,
Cyberstar Infocom, Neoteric Infomatique, Rashi Peripherals-in short, the big
boys in the distribution game.

It takes a lot of guts for these companies to participate in an open forum
discussion at these events with the entire channel community in front of them.
There are questions hurled, allegations made, demands raised and faults pointed
out.

In short, it is a rocky ride for the distributors. But to their merit, this
has not stopped them from participating in the IT Panchayats and interacting
directly with the channel, and the media present to capture their every word.

This shows that the distributors are aware that there are areas where they
need to improve and are also willing to go the extra mile to help their channel
partners. I have often seen partners at the IT Panchayat raising post-sales
service issues and the distributors taking note of their problems and trying to
work a mutually beneficial way out.

A case in point is the service camps organized by Rashi Peripherals, which
came right after the channel demanding some training on first-level service from
distributors. Even one such initiative means that we have achieved the objective
of the IT Panchayat.

So, maybe the channel needs to rethink about the cast iron role they have
selected for distributors as a villain. If thought pragmatically, you have to
admit that distributors are putting their neck on the block by extending high
credit to partners and for a period of almost a month. At any given point, a
distributor has a very high amount of credit floating in the market, and even if
one of these partners defaults on the payment, the distributor can kiss that
payment good bye.

If this is not enough, most channel partners use distributor as stockist,
placing orders and then urging the distributor to ship the product straight to
the end customer with the distributor paying the cost for the stocking of the
product in his warehouse.

Besides this, they also try to come out with bundle schemes and some have
even started coming out with value propositions for their channel. This includes
offering training workshops, technology seminars etc. Can one in all, honesty
still say that the distributors are a bad lot?

I think one has to accept that the distribution business is also maturing and
distributors are trying their best to find out ways and means to engage the
channel in productive business and help them grow their business. At the same
time, they still indulge in practices like stock dumping, price undercutting and
some arm-twisting.

But if this is such an issue, then the partner has the right to stop trading
with that particular distributor and go to another one. In such a scenario, the
distributor has more to lose than the partner.

But demonizing the entire clan of distributors for isolated incidents of
wrong doings is not going to help anyone. Like one distributor recently pointed
out, “If the channel hurts me and sucks my blood, I will die. In that case, the
partner will die eventually as well. We share a symbiotic relationship with
partners. The channel has to understand our viewpoint and keep us healthy
because only then we can keep them healthy and growing as well.”

Think about it.

vinita bhatia

vinitavs@cybermedia.co.in