Get Together 2 Grow Together (GT2GT) Summit takes off

NR Sethuraman

Madurai

April 15, 2008

A first-of-its-kind meet between the channel and vendors organized by
Confed-ITA was held in Madurai on April 12. The event, Get Together 2 Grow
Together (GT2GT) Summit, saw the participation of vendors like Intel, HP, Epson,
HCL, Hitachi, Numeric, Samsung, TVS-E, Wipro, Acer, Canon, K7 Computing,
Compact, Seagate and Dell. Executive members, representing the 14 IT
associations in Tamil Nadu, which are under Confed, were also present on the
occasion.

Introducing the Confed-ITA and the reason for conducting this channel-vendor
meet, Suresh Kumar Soni, Chairman, GT2GT Summit said, “This would be a
platform to share and identify the problem areas that exist between the channel
community and vendors. This meet will also help in improving the service
deliveries and coming out with a joint plan to work together as a team.”

Welcoming and thanking the vendors for coming to the GT2GT Summit, S
Karthikeyan, President, Confed-ITA said, “The idea of the summit is to
identify the smaller problem areas between the two and sort that out in a smooth
manner. This is the first time that such a meet is taking place between the two
parties. We are looking forward to more such meetings and to making it a regular
event for a two-way interaction.”

At the start of the summit it was made clear that no personalized accusations
would be made at any vendor present. “We are not going to point fingers at any
vendors, we aren't here for that. We are here to express our concerns and to
sort it out smoothly,” Karthikeyan emphasized.

Vendor loyalty

S Prakash, Secretary, Confed- ITA made a couple of presentations on the
sales and service issues faced by the channel community and put forward a few
recommendations on that front. According to him, the lack of policies in
appointing or removing the channel partners was a major drawback for the channel
community. He also claimed that there is a huge difference of opinion between
both the communities on this front.

“The channel feel that during dull sales month, the vendor executive
appoints a new channel partner in order to achieve their target, incentive and
promotion in their respective category. The vendors feel that the existing
channel are not able to achieve the target and most of them are not loyal and
non co-operative to the vendors policies,” Prakash claimed. He presented a few
points on the expectations of channel community on the sales front, such as
appointing sub distributors according to the city's potential and taking
inputs from local associations. He stressed that in case channel partner were
changed for any reason, the existing unsold stock should be taken back at
invoiced value and all backend claims should be settled before the next channel
partner takes over. He emphasized the importance of price protection, claiming
that it is must for all tiers, similar to the one offered by the mobile phone
companies.

Channel recommendation

On the sales front Prakash's recommendations included:

* Pre-launch training and training on complete technical specifications
involved in the product and issue of authorization certificate from the vendor
to sell their products.

*All claims and backends to be settled within 30 days from the end of the
scheme period.

*No vendor should be involved in direct billing, it should be routed through
local partners only. In cases where the order is big, the vendor can resolve to
direct billing with suitable ORC to the local partner. Under no circumstances
should billings be routed through out-of-location dealers.

*The vendor-dealer relation should be on a long-term basis. It should not
suffer when a Vendor executive changes.

*The service providers of the vendor should not offer direct sale of support
packs, warranty extension packs, and spares to end customers. The vendor should
circulate the prices for support packs, AMC and spares to all members through
their existing channel only.

*Vendors should quote MRP only in advertisements. There should not be any
street price, HFF, installation or carry case. Also the vendors need to stop
quoting the features of the higher end model and mentioning lower end model with
price starting from kind of advertisements.

*All freebies should be given with product itself, as the process of sending
DD, claim formats and proof of purchase is creating problems due to delay in
sending the free gift and the dealer/reseller has to do lots of paper work, bank
work, follow up work and handle the irritant customers when there is a delay.

Single dealer strategy

Claiming that vendors' multiple dealer strategy for pushing a single
product is a huge set back to the small time dealers in the upcountry regions,
PN Prasad, VP, Confed-ITA, said, "If vendors adopt single dealer per product
strategy in an area, the trade would be more efficient. Involving multiple
channels for a single product would eat into the margins of others and channel
would sell without any growth." He stressed the fact that multiple products
are available with a vendor and they could tie-up one channel for each of their
products.

"The vendor can select their channel and based on their performance they
can decide, whether to continue with him or not. In such cases we can support
each other, as we are dealing with different products. Working with a small set
of channel could add a lot of value to the vendors and the relationship would
also be a strong one," Prasad claimed. He also said that continuous drop in
prices in the products is also a major concern for the channel partners.

DoA/Warranty issues

On his second presentation on the issues in post-sales and service, Prakash
mentioned that dead on arrival (DoA) and warranty were the biggest challenges
faced by the channel community. "The DoA policy currently available does not
satisfy the channel at all. The present DoA policy requires a customer's
invoice/bill for DoA, which none of the customers possess. Almost all DoA cases
are sales return for the channel and the channel end up having to replace the
product," added Prakash. He further requested vendors to agree on the terms of
the channel, as they are the customers' voice. Suggesting a few solutions for
the warranty issues faced by the channel, Prakash said, "A warranty card is a
must for every product, and warranty card or invoice should be accepted for
warranty service. The service policy should be very clear and should not mislead
customers with tricky terms." He also requested vendors to bear the warranty
expenditures paid by the channel.

"Channel can never spend money for transportation of product failure.
Warranty replacement part transportation expense with insurance should be borne
by the vendor," Prakash averred. He also said that vendors should appoint
sufficient number of Service Facilitation Centers to handle this and requested
them to specify the time for completion of warranty service.

Prakash suggested that the maximum time for warranty replacement should be
seven days in remote locations and not more than three days in major cities.
Even in the warranty norms, Prakash suggested that it would be ideal for the
vendors to go by the channels norms, as warranty issues were no way smaller than
DoA. He added that handling consumer court cases were the vendors'
responsibility. "Consumer court cases have to be handled by vendor directly,
especially in cases where the onsite warranty is provided by the vendor. The
ownership fully rests with the vendor and not with the dealer or reseller. All
consumer protection court actions will have to be taken up by the vendor both
physically and financially," Prakash urged. He claimed that standard warranty
terms and support policy of the vendor should be circulated to the entire
channel and promised the complete support of local associations for that matter.

"The vendor should call all the partners for a meeting at least once a
quarter to share the roadmap and also to resolve all pending issues. The
associations would provide complete support in such cases and any difficulties
should be brought to the notice of Confed-ITA," Prakash said.

Vendors speak

Following the various claims of the channel, vendors voiced their views on
issues like margins, price protection and strengthening of relationship between
the two communities. Vendors felt that the continuous price drops are made to
ensure the channel partners clear the stock. Most vendors agreed to work on
price protection and supporting the channel. Vendors also agreed that working
with limited set of partners in upcountry would be beneficial in terms of
maintaining good relationship with the channel and generating more revenue per
dealer. Pointing out that every issue would finally boil down to margins,
vendors suggested that the channel should also look at generating revenue from
services as most partners were offering free service to their customers and
missing out huge revenue opportunity in the business. Partners agreed
unanimously.

From the vendors' side there was hardly any response regarding the claims
and suggestions put forward by Confed-ITA. The meeting proceeded without any
altercations from either side. For the channel community, it was an opportunity
to talk directly with vendors and their representatives, and for the vendors it
was an opportunity to interact personally and officially with their carriers.

Prasad informed that Confed-ITA would be holding its second Summit in
November 2009 where about 1,000 resellers from all over Tamil Nadu and
Pondicherry would be present.