Time For Intelligent Hard Work Is Here

A laborer works very hard physically and earns lesser than an architect who
does a fraction of that hard work but earns much more than the laborer. This is
why Rajesh Goenka of Rashi Peripherals feels that partners should work smarter
and not merely harder in face of the slowdown

The slowdown is here and it can no longer be swept away under the carpet.
Rashi Peripherals came face to face with it in OND 2008 and has since changed
its business strategies to deal with the downturn. Rajesh Goenka, VP-Sales and
Marketing, Rashi Peripherals, talked about these changes implemented in the
company and gave suggestions to the channel partners on how they can deal with
it as well.

Plan your inventory

Most channel partners will not want to recall the business carnage witnessed
in the last quarter. Payment defaults and delayed payments were rampant during
this period and a lot of this had to do with excess inventory stocking in the
channel. “We are strict with our payment schedules and processes with our
partners so while there were some delays, but very few defaulters. This strategy
has helped us, and it is time that partners should emulate this strategy as
well,” informed Goenka.

But he pointed out that January and February have been the correction months
for the channel business for two reasons. Firstly, overstocking at the partner's
end has been controlled. “Now partners are looking at bulk purchases to get some
rebates but instead they are planning their inventory well. In fact, if they
feel that they can sell 10 units, they prefer stocking only nine. This is an
intelligent business strategy, and if they are not following this practice, then
I urge them to do so strongly,” Goenka stated.

Of course the first argument that partners are bound to offer in this regard
is that the IT hardware business runs on volume purchases and sales. Unless
partners do not buy in bulk, they will not get the price benefit from their
suppliers, which they can then forward to the customer, keeping very low
margins, to make some profit.

In fact, it is unique to the IT business that the price offered by a dealer
is often lower than the prices offered by a national distributor. This is
because the dealer will buy in bulk, calculate out the backend incentives and
scheme benefits he will get, and then take this out of the cost price and sell
it to the customers.

But in tough times, they need to think about survival and not just about
selling. “To do so they need to safeguard their margins and not entirely
concentrate at product turnover,” Goenka advised.

Be pragmatic about targets

Worldwide, most countries, other than India and China, are talking about
negative growth this fiscal year. The Indian government predicts that India will
grow at a rate of five percent this year. Given this conservative outlook it is
best that partners too relook at the sales targets they have set for their
companies and become more realistic.

For the 2009-10 fiscal, most vendor and distribution companies are looking at
just achieving their 2008 targets rather than posting growth. This is something
the channel can emulate as well. In addition to this, the channel should look at
broadening their customer base.

Rashi currently has a wide range of products aimed at the dealer, systems
integrators and corporate channel and we also sell to large format retailers (LFR).
So at a time when LFR customers are not registering good business, Rashi is
focusing on other customer segments and working out ways to get their buy in.
“We also have identified the products which can be pushed into each of these
channel and work strategically towards that,” Goenka said.

Contrary to naysayers, he believes that the market is not as bad as it is
made out to be. “There have been just a few cases of payment defaults, which are
negligible. If the situation were really that bad, then the incidences of such
cases would have been much higher,” he rationalized.

Focus on smaller markets

According to a survey conducted by The Rural Marketing Association of India
(RMAI), there has been no impact of the economic slowdown on the rural economy
in India and given that more than 60 percent of India's income comes from the
rural segment and small towns, this is an important fact to be noted.

The survey also noted that rural markets offer great opportunities to
marketers trying to find a way out of the current economic crisis in villages
and towns; self-employment is preferred over salaried jobs, with 53 percent of
the rural population being self-employed, as compared to 36 percent of the urban
population. About 66 percent of the rural population makes a living out of
agriculture and the economic meltdown has no negative impact on this sector.

This is why for regional or national partners, this is the time to tap into
smaller cities rather than focus on metros where the business has begun to
stagnate.

This is also the time when partners need to become more innovative about the
solutions they offer, especially since customers are not willing to invest in
new products. “If a partner has 10 customers who buy desktops or laptops, surely
he can tap them to opt for Wi-Fi networking in their homes and pick up that
incremental business rather than trying to merely sell them more computers,”
suggested Goenka.

This is time for every partner to put in that extra effort. But there is a
need to back this effort with intelligence. A partner will have to engage with
each customer on an extensive basis and then identify ways to see how to get the
customer to invest in technology, which is crucial to their business and not
non-critical solutions.

“If you put in the effort then you are bound to get a piece of the
competition's pie as well. It is all about thinking where you need to dedicate
your efforts in rather than opting to go for the traditional business alone,”
Goenka added.

This is also the time for liquidation and collection of payment rather than
upping the transaction. The entire economy is shaky right now, so the challenge
right now is to sustain. This is not the time to get out of business. “Most
partners have made good money in this business over the past few years, so now
when the business is slow they will have to just work out ways and means to
sustain themselves rather than consider closing business,” he noted.

He also hoped that partners are smart enough to separate the wheat from the
chaff and the reality from the hype. While it is easier to get carried away by
the pessimism in the market, what partners really need to do is relook at the
way they have been doing their business over the years and adapt to the changed
circumstances.

Vinita Bhatia

vinitavs@cybermedia.co.in