Decreasing margins and ongoing concerns over economic conditions and currency fluctuations is forcing many distributors to re-evaluate business strategies in a bid to stay competitive.
In a two-part series, ARN asks a host of distributors, ranging from the traditional players to niche providers, their 2011 action plans and strategies regarding new areas of investment.
Anyware Computer Accessories managing director, Garrison Huang, said the twists and turns in distribution are continual and challenging. He pointed to the recent Manaccom collapse as a prime example of a company that succumbed to adverse market conditions.
“It was the last remaining software distributor and now it’s gone. It has left quite a few holes in the market. I would be interested in some of the product. I will be eying potential opportunities including McAfee.”
Manaccom specialised in providing publishing and re-publishing services for software developers. Its distribution line up included McAfee, Acronis, Net Nanny and MYOB.
Indeed, the rise and fall of distributors is forcing many in the business to take stock and reassess market opportunities.
Huang said diversification is the key. “We’re interested in looking at software sales as an add-on.” He’s also got his sights set on China. “China is the key,” Huang said. “There’s a realisation in the market about China’s growth in their technical knowledge and manufacturing, and how it will impact the distribution business. So we want to shift our focus to China and look at bringing in more key and leading brands in computer accessories from China.”
Producing Growth
He said the company will remain a niche distributor, just a more diversified player. “But that doesn’t mean we stand still. We will stay away from the major IT hardware as it is too cutthroat, and we will look at covering more products and more technology areas. There is no one magic bullet in terms of producing growth, so you have to diversify.”
The company is also setting its sights on the mass merchant market. “An entrance into the mass merchant channel, which is not our traditional focus, will be a big play for us this year.”
WhiteGold Solutions managing director, Dominic Whitehand, agreed going after new market segments is the best way to stay competitive.
In what may be considered the company’s biggest year of change and strategic manoeuvring, Whitehand is also ramping up staff resources, bringing on-board inside sales, product managers and technical resources in order to enhance channel coverage.
“We plan to grow the business by 50 per cent plus – through connecting and working with our channel in more ways than ever before,” Whitehand said. “By leveraging existing vendor offerings and introducing new vendor offerings to address additional new market segments, we can help the channel interface more effectively with their end user customers.”
Whitehand sees big opportunities in the converging consumer/SME space, where triple-play (data, voice and video) technologies are being driven by applications, which are intrinsically spreading across the home and office environments.
“We’re equally excited about the enterprise space, where some key new technologies in security and storage are providing us with huge opportunities to service our enterprise customers with bleeding-edge solutions for their customers.”
In the enterprise space, Whitehand said the company will laser-focus on strategic accounts, both new and existing. “Not only increasing activities around existing vendors that service this market – but introducing some key new technologies – including IP address management (catering for the IPV6 transition), malware protection systems and network forensics.”
Cloud is also on the agenda, he said. “There is a massive increase in the demand from partners who wish to provide the content [and also the applications that drive it] on a managed services basis in the cloud. We will address this market with requisite speed ... possibly via launching a specific cloud practice in 2011.”
Synnex Australia is also eyeing cloud opportunities, and is undergoing massive change in order to roll out its strategy, CEO, Kee Ong, said.
“This is a big year for us,” he said. “We are transforming our business model from pure distribution to a service provider role. We’ve already put in a lot of investment, and it’s not just for this year, but for opportunities over the next three to five years.”
As part of the strategy, Ong said the company will make a play in the managed services arena, and is ramping up its logistical services to partners (increasing delivery efficiency and expanding coverage).
Meanwhile, Dicker Data managing director, David Dicker, is unclear about the cloud opportunities for a volume-based distributor.
His main growth plans include widening his vendor portfolio. “We want to do a bit more with printers than in the past. We want to focus on the same technology categories, but just add more vendors.”
And with the company now listed and trading under the ticker DDR, what does this mean for company direction and strategy? Dicker said “it’s not a dramatic change.”
“It’s just another brick in the wall. It makes the company stronger and gives us more credibility. It gives us more credibility with the bank and with customers, and gives vendors more confidence.”
