Cisco’s top rung resellers are reverting to distribution after just months of trialling a direct relationship with the networking vendor under its Direct-to-Gold Partner program.
The return signals that the program, launched last year in an effort to divert more margin into the vendor’s pocket, has fallen flat amongst the big solutions-focused integrators and is being utilised primarily by the so-called ‘box droppers’.
The most obvious shortcomings are in the areas of delivery, credit terms and assistance with pre-configuration.
Managing director of Lan Systems, Nick Verykios, said forward orders and back orders for January showed a 90 per cent recoupment of the revenues the distributor was recording prior to Cisco’s changes.
“Our Gold sales are still not where they used to be but [are] steadily increasing from the huge drop we experienced in October to December,” he said
Verykios said initially there was “a pretty steep shift away from distribution” as resellers pursued the extra two or three per cent margin that buying directly from Cisco promised. However, they quickly came to realise that bypassing distribution could be “quite a substantial false economy.”
“[The resellers] have had quite a few blow outs and have been able to measure the cost to them in not using us," he said. "So slowly [they are] coming back,” he said.
For more on Cisco and its distributors, see this week's issue of ARN.
