Special distribution report: What price is value add?

Special distribution report: What price is value add?

A new threat to distribution has emerged. On the horizon is a company with over 36,000 staff, 4,600 points of presence and one of the most advanced e-commerce procurement systems in the world. The company can deliver to any residential or business address in Australia, handles credit lines, provides financing, clears its own customs and can even assemble components before shipping.

If last year was the one of the toughest in IT distribution, then 2002 is proving to be a whole new ball game. With Australia Post announcing its intention to become a serious force in IT distribution, coupled with decisions from the likes of Acer Computer Australia and Cisco Systems to bypass distributors for their top-tier partners, distributors are being forced to demonstrate the value they bring to the channel's table more than ever before.

But it's not necessarily a doom-and-gloom scenario. In the heady days of solid 40-point margins across the board, additional services such as warranty support and delivery were thrown in for free. But as margins thinned, customers became more accustomed to paying for what they wanted, and not for what they didn't -- effectively dictating the terms of their business. The opportunity has now arisen for distributors to first identify what services the customer needs and is willing to pay for, then carve out a market in the delivery of these.

For the full report on the state of distribution in Australia, with a comprehensive round-up of more than 100 distributors, see the special Distribution Supplement inserted in this week's issue of ARN, out now.

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