Value added distributor 1World Systems is focussing its business model back onto networking and communications by selling off its commodity business and reducing the number of resellers it markets to.
"What we're trying to do at the moment is get back to the basics of what we do best," said 1World product marketing manager Tim Mansour. "And we intend to be working a hell of a lot more closely with our resellers than we ever have before."
The result of that refocus will see the value-added distributor reduce the number of resellers it markets to from around 700 down to nearer 100. "We want to be in a position where we're going to be servicing our top resellers extraordinarily well," explained Mansour.
But in doing so 1World won't reduce the number of people who can buy from it. "What we're going to reduce is the number of people that we spend our time marketing to," Mansour said, "because there's no point in doing all that marketing to people who aren't going to buy often."
The distributor has also recently changed location, moving from its Alexandria premises to a new headquarters in Hurstville.
The refocussing on 1World's core networking communications business has seen it sell offits 1Link range of commodity products, which included hard drives, RAM and CD-ROM drives. "Looking back over the last couple of years, it (1Link) contributed an awful lot to our revenue," said Mansour, "but it actually didn't contribute an awful lot to our profit, so it tied up a whole lot of logistics and mindshare.
"What it did give us when we were building our business was presence in the marketplace, and it trained our resellers in how to buy from us," Mansour said. "Because they would come to us for things that they bought every day, and then they would realise what it was like doing business with us and then hopefully they would come back for other things that were more important. Now that we've established those sorts of relationships with our resellers we don't need that any more."
Indeed, the company has come a long way since its foundation by general manager Nick Verykios in 1994, when he capitalised on an opportunity he saw to package disparate networking communications technologies into a single saleable solution.
"The end user really was incredibly confused by the range of products and by the technology," says Verykios. "What they wanted was to send files fast, and they wanted remote access, because they had the field sales people that they wanted to attach to the databases."
Verykios developed a concept that came to be known as the Local Outer Network (LON), and the basis for the foundation of 1World. "The model of the LON is a group of products that will allow you to access any resource that the com-pany owns as if they were there on the network," said Verykios.
He realised that to provide such prepackaging, 1World would need to work as a value-added distributor, to pull the products together. Verykios says the idea appealed to resellers, as 1World could provide them with an integrated product. "And when people ask me why 1World has been successful, it's not because we're a distributor, it's because we sell a product. And what we sell is different," he said.
1World began rolling out the Local Outer Network concept in 1994, with eight staff. In that first year it turned over $7.1 million.
Since those days 1World has added extensively to its list of products. Its portfolio now consists of distribution rights for Eicon Technology, D-Link, Fore Systems, Shiva and many others. The company operates a "less is more" philosophy, limiting the number of brands it distributes to eliminate confusion between product lines.
In addition to its services as a distributor, 1World also offers training to resellers. Verykios feels that here too 1World can offer something a little different. "All of our reseller training is positional stuff. When resellers come and get training from us, they walk out not thinking product, but thinking customers."
While 1World also sells products as point solutions, Verykios says he has no interest in making the company a time and place distributor. "What I really am doing is adding my own flavour around the product," said Verykios. "I think time and place is starting to lose out, because it's of very little value. All you're doing is warehousing margin and maybe spreading the credit risk. Time and place distribution is almost becoming the work of the really good mail houses or the really good freight companies."
Likewise, Verykios has no intention of taking his company direct. "I have to keep my resellers in business, and that's purely because they're my sales force," he says.
"If I can't keep them in business I'll close the doors tomorrow, and if I was going to start competing against them it would mean I have nothing to give them."
Although he doesn't feel the channel is converging, he is aware of it changing shape. "If you compare our channel now to channels in grocery, consumer electronics, white goods, or travel, we're getting closer and closer. And some of the channels are not only three tiered, but some are five and six tiered.
"So it's almost a contradiction to say that it's got to be vendor to user or vendor to reseller."