EDITORIAL: What goes around . . .

EDITORIAL: What goes around . . .

Do you get the feeling there are some very reticent vendors out there at the moment? You know the ones who are now suddenly fully aware of where their next meal is coming from, but who in the past have almost arrogantly dismissed channel partners as extra mouths to feed rather than trusted allies.

When the bull market turned into a cockroach market, with all the players scuttling for cover, everything old became new again and the vendors with the greatest distribution strategies start coming to the fore.

To be fair, some vendors have long mandated the channel, but many others have spent the last two years working on ways to circumnavigate it or manipulate it to their advantage for the margin and value-add revenues on offer. Whether it be the straight direct play through retail or e-tail, or the wily acquisition of a key partner (thus setting up in competition), it has generally been an acceptable strategy for vendors to hunt down a slice of the distribution pie.

Now the worm has turned and it is prudent for vendors to be well exposed in the channel community.

Distributors perhaps felt the most heat in the channel rationalisation, but the strong ones are also likely to reap some benefit from the vendor scramble to be on-side with the channel again. As the piggy-in-the-middle, distributors felt some of the fallout from those knee-jerk-reacting vendors who saw them as expendable.

Those same distributors are now best buddies of the SMB-seeking vendor, and they may see some respite in the rush to enable small enterprises with the wares they distribute. The strong will survive and pick good scraps from the carcasses of the fallen.

It should also never be forgotten that vendors need distributors, and that is never more evident than when there is a softening market. They have neither the resources nor the business processes to manage the menagerie of small-to-medium resellers, let alone the resellers' customers that represent the greatest growth opportunity for the IT industry in Australia.

For vendors, managing channel conflict has proven to be a greater challenge than anticipated, and the rush is now on for them to again be channel savvy.

As well as returning to tried and trusted two-tier methodologies, hybrid business models and distribution strategies are also emerging as some existing methods go stale and new experiments go awry. Harvey Norman's dive into the so-called "affinity program" market [see page 1)]is a classic example. In many ways it is a copy of what Virtual Communities has been doing for two years. However, it also represents the clear emergence of a new marketing strategy borne out of the need for vendors to keep the PC uptake curve healthy.

If the hype of CRM vendors is to be believed, the trick is to get closer to the customer. In the latest evolutionary stage of PC technology adoption, actively targeting communities of potential customers with schemes like the "affinity programs" seems like a good strategy.

Consumers and other small buyers are going to feel more comfortable parting with their hard earned if they believe they are getting a bargain because of their association with some collective body. Hopefully, the manifestation of satisfactory service lives up to the promise.

As any dealer will tell you, first-time PC users can become treasured customers if treated correctly, but similarly they can be an after-sales service nightmare if not nurtured.

But I digress. The starting point of all this was that vendors, now more than ever, rely on channels. And they know it. As their proverbial wells run dry, they need an army of scouts to gather water, and that means partners, alliances and resellers.Gerard Norsa is editor of Australian Reseller News.

Reach him at

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