True Value Added Distribution
By Stanley Mekkattu Glancy
Distributors have been talking about value-added service for quite some time now. All agree that it’s the only way to survive in the emerging highly competitive scenario. But most channel partners 360 Magazine spoke to complained that this was hardly the case. Except for a select few, most distributors do not provide any value-addition, they said.
But most distributors do have service centers in different cities. And most try and provide quality products and services. However, providing high-quality products and service reliability is no longer enough. Both manufacturers and channel partners demand much more from the new age distributor. So what does value-addition mean in the current sense of the term?
The basic definition of value addition says it’s any factor added to a product to increase its value or price. In reality value addition can be split into three sections —presales, support sales and post sales.
Presales
This is one aspect of value addition, which is ignored by most of the channel. But this is as important as either sales or post sales support, and especially so when a new product is launched in the channel.
Many partners enter the market without a clear understanding about the pros and cons of the business. That is where a distributor can play a lead role by enabling them to understand the pitfalls in terms of deliverables or credit.
True value-added distributors empower the channel by educating them about new products, invest in marketing campaigns, and more importantly, ensure that the product is available across
the country.
Says Navinder Chauhan, marketing and communications manager, Rashi Peripherals, “Distributors not only need to educate the channel but also train its internal staff about the product. Only when the internal staff is aware about the latest offerings and its technicalities will they be able to pass on this knowledge to the channel. In addition, distributors also have to ensure that the product available wherever there is demand.”
Post Sales
The manufacturer promises the warranty on the product. But the onus lies on the distributors to provide it. Hence, distributors need to have systems in place to track products under warranty, and take steps to be closer to the channel partner as well as the end customer. Most distributors 360 Magazine spoke to are either putting in place new systems or upgrading legacy systems.
Says Chauhan, “Value addition doesn’t end with sales. It extends to the post delivery phase as well. The distributor should put systems in place to provide support at the lowest cost, and ensure that the entire supply chain function as a single entity.”
Beyond this, distributors also need to ensure the continuity of a product line by either launching upgrades or replacing it with a new product if the existing one is being phased out. “If a product line dies out then providing warranty would prove to be a serious challenge,” says Chauhan. Adds Kulkarni, “The distributors’ role is to reduce the risks involved in the business and provide the channel with an efficient service model.”
Requisite Factors
Any distributor should first add value to its manufacturer partners by giving them the right kind of support. Says Paras Shah, Neoteric, “The instrument to penetrate into the market is the channel partner. The distributor should give the channel proper direction about business strategies.”
Different distributors have expertise in different areas. They can hone this expertise wherein both manufacturer as well as the channel partner can benefit from it. “I believe it is not about having few exclusive partners or a few hundreds. What is important is to have the right strategy for that market,” says Shah.
Thorough knowledge of a product is a key component in effective distribution. Therefore, product training remains a primary factor. But today the challenge for the distributor is different. Distributors should identify methods to conduct the training without taking the sales force out of the field for an extended period of time. One method that has been working successfully is online training with many distributors setting up robust online training websites for partners.
Profitability is another key factor. Says Aditya Bhuwania, “Unless a distributor is profitable, the partner cannot be profitable.” But J. Kulkarni of Redington feels that channel partners do not need help from distributors to maintain profitability. According to him, the distributor can help the partner to access business opportunities, which it may not be able to do on its own due to geographical or financial restrictions.
In terms of sheer profitability, there is very little the distributor can do. However, ensuring that they run a profitable business is something the distributor can do. For instance, large tender queries can be addressed more effectively through distributor participation. Since a small reseller may not be able to comply with these requirements the distributor can step in to fulfill the demand.
Finally
The goal of a distribution company should be to make sure that the right product is made available at the right time in the most efficient and cost
effective manner. Distributors not only need to procure the product from the channel and sell it to the next level but also ensure that it in turn successfully sells to the next level by creating demand for it. A single weak link could affect the whole chain.
About the Author
Stanley Mekkattu Glancy is a senior staff writer at 360 Magazine, India's leading IT channel magazine from the IT Nation Group, a new age IT media company. Prior to taking up this assignment he was correspondent cum sub-editor at Express Computer, India's only technology weekly published by the Indian Express group. He has written various articles on 'the business of IT' during the last four years he has been in IT journalism.
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What Everyone Should Know About How To Buy Wholesale
By: Melanie Burns
Finding a supplier for the product you want to sell, at a price that you can profit from, can be a big task. The best suppliers for your online sales or auctions do not advertise their services and often cannot be found online.
Those that you can find online tend to be middle-men. It is often difficult to get a good enough price to make any real profit online.
Let me tell you about my simple 2 step system to find an untapped source for wholesale suppliers. This is so simple that it's often overlooked as a source for product. This system involves thinking outside the box and not letting policy stop you. (continued below)
The First Step to find a supplier is to find someone that already sells or has access to what you want to sell. This could be a website, an eBay seller, a manufacturer, a wholesale outlet, or a regular store in your city. This is the easy step. You know what you are looking for and you can search on the internet, not for a wholesale source, but for anyone already selling what you want to sell.
Another valuable source for a local supplier is your local phone book. The yellow pages are the best way to find local sources. This should be the first place you look. Doing business locally with someone that you can meet face to face is a big plus for your business.
Another potential source for your product is to find a distributor who would be willing to private label a product for you. You could get a very high quality product for a much lower price than if it had the name brand label.
The Second and Key Step is to convince the source you found to become your supplier.
Manufacturers and wholesale sources often have minimum orders that might be beyond your reach if you are just starting out. Online retailers, eBay merchants, and retail stores may be your best bet. Try to find a small store who is looking to expand.
But remember, you are dealing with a human being and they can be convinced to do business with you. Just be sure to sweeten the deal for them. One way is to offer the person you are dealing with at your new found source, a percentage of your profits from the products he supplies you.
Be sure to project it out for him. If he can see the benefit of working with you even though it causes extra work for him, you can be successful in making a deal.
You could offer him 20% of the profit from sales of his products. For example you could show him that you project to make at least $100 profit from each product, and you expect to sell 40 of them per month. The $4000 a month means an extra $800 per month in his pocket. You still make a nice $3200 profit for the month in this example.
On top of that, he will be ordering more products from his supplier and may be eligible for a higher price break from them. This way, his reward for the effort to work with you, is making money on both sides.
There are many benefits you can offer your potential supplier, but no matter how you look at it, the main thing it comes down to is MONEY. What's in it for your potential supplier to do business with you? If can you show him that, you have a better chance of making a deal with him and starting your online sales.
NOTE: When looking for suppliers around your city, don't go trying to impress the big stores with your $800 or even $3,000 extra income per month proposal. Try going to the little stores that are looking to expand their business, they are the ones that are usually more open to new opportunities.
The big stores are making hundreds of thousands of dollars per month in profits, so an extra couple of thousand would probably not impress them the least bit.
So now you see that by thinking outside the box, you open the door to many possibilities and increase your ability to make money online with your products.
About the Author:
Copyright © Melanie Burns
This article is free for reproduction but must be reproducted in its entirety including live links and this copyright statement. Subscribe to the iBusiness How2 Newsletter to receive hot tips, how to's, internet business tools, and relevant product reviews by sending an email to: newsletter@internet-business-how-to.com
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