Work in the interest of your real customer: Bhopal

Bhopal

September 3rd, 2007

This is what the partners in Bhopal demanded of the distributors. Most of the
partners present at the IT Panchayat, organized by DQ Channels and The DQ Week,
declared. Partners present at the event claimed that distributors have forgotten
who their customers are. "They are more aligned to the vendors and
therefore do not look out for the interest of the dealers," claimed a
partner from RK Media. In fact, Anurag Doshi of Taurus Micro Systems noted that
distributors in Bhopal are nothing more than cheque collection points and
product depots and do little more than offering credit.

Anupam Chaurasiya of eSys Technologies and Ajeet Singh of Rashi Peripherals
represented the distributors, while Manuendra Gaur, Latest Devices and Anurag
Doshi spoke for the channel. Vinita Bhatia, Executive Editor of DQ Channels,
moderated the discussion.

Need flexible credit limits

Gaur wanted to know why were distributors not more accommodating about
credit limits, with partners who have been doing business with them for several
years. "We are giving you business worth Rs 10 crore annually. Yet if we
suddenly have a business requirement for picking up stocks worth Rs 50 lakh,
while our credit limit might be lesser than that, distributors simply refuse to
accommodate us. This means we end up the losing that contract, because our
distributors do not have any faith in us though we display our trust by giving
them payments upfront," he complained.

Singh claimed that distributors have a policy of not extending credit limits,
because in the past they have suffered huge losses when partners failed to pay
up. He then noted that the assembled partners had not raised the problem about
Indore feeding the Bhopal market. Partners were quick to rise to this issue and
blamed distributors for creating this unhealthy practice.

Said one partner, "Prices offered to the Indore dealers are lower than
those offered to us in Bhopal prodding partners and end customers often buy from
Indore. This can be controlled if distributors offer price parity in both the
cities."

Besides this Gaur noted that distributors do not do often-stock allocation
properly between Indore and Bhopal. Indore is over stocked, while Bhopal does
not get as much inventory, which is another reason why people buy from Indore.
He advised that distributors should plan their inventory distribution well so
that neither of the two towns is affected.

Expansion of the channel

Another grouse that partners had with distributors was that the latter were
injudiciously adding more partners to their network, which showed that they did
not have any loyalty to their existing dealers. This also affects the overall
sales of these dealers, as they have to deal with increased competition, which
often results in them under-cutting prices to sell more.

But Singh claimed that distributors have a reason to add more partners to
their network. "We have some sales expectations from dealers, but when this
is not met then we have to add more partners," he said. But he assured that
despite adding new players, the distributor's commitment to his earlier dealers
is not diminished.

At this juncture partners in the audience questioned whether these sales
expectations change weekly and if they don't then why are new dealers appointed
every week. Gaur also added that why is that distributors relax their dealer
verification rules when they want to expand their channel, which otherwise is
very strict.

Doshi felt that vendors are equally to blame for this problem and Chaurasiya
too accepted this adding that distributors are also under pressure from vendors
to generate more revenues from Bhopal, which results in the addition of new
partners. This in turn brought up another topic for discussion about why are
distributors succumbing to vendor pressures. "This underlines again how
distributors are increasingly becoming a vendor's ally and partner's foe,"
one partner remarked later.

The issue about dead on arrival (DoA) was also raised and Gaur wanted to know
that if distributors insist on immediate payment, why couldn't they offer
immediate replacement of DoA products. Singh replied that this was because
distributors do not have adequate buffer stocks. This is surprisingly
considering how vendors keep going to market with statements about having a very
good buffer stock inventory at all their offices.

Singh also stated that keeping buffer stock was also determined by the
quantum of business generated from a particular brand. This again meant that
either the failure rate of the best-selling brands was very high or partners
have to factor the fact that there will be a percentile of DoA that will arrive
DoA for most brands. Needless to say, partners were not pacified with Singh's
statement and demanded that immediate replacement should be made available for
DoA products.

At this point Doshi noted that these problems could be dealt with best if the
partners form an unified front and an association where offending companies were
made to live up to the minimal levels of support. He also revealed that a new
association Bhoj IT and Office Automation Association (BITOAA) is in the offing
and should be officially announced later this week. Looks like the IT Panchayat
was the right catalyst in the formation of yet another association in the
country, giving partners a platform to sound out their issues.