With only a few years of experience under its belt, Sydney-based 24/7 Distribution has made a decent name for itself in the IT distribution business. What has enabled the business to get ahead in such a short time? PATRICK BUDMAR found out.
It is no surprise that the majority of successful distributors in the Australian market have been in the game for a while. Having set up shop in 2005, 24/7 Distribution managing director and CEO, Tony Geagea, is the first to admit that the distributor was somewhat late to the distribution game. However, 24/7 Distribution knew that the only way it could make an impact in the market was by being different.
“One of the things that we didn’t want to do was be just another distributor,” Geagea said.
When looking back at the period when 24/7 Distribution started up, Geagea remembers the IT business being “very big” on products and that the Cloud did not quite exist yet.
“It was about getting an asset out on time, measuring and managing the costs associated to it, and that was the value that resellers really needed,” he said. “Everyone talked about value added services, but it was really hard to put a value on it in terms of tangible value.”
Geagea also remembers that resellers tended to be on their own back then, especially when it came to getting an application or product from a distributor, and then making sure that it integrated, fit for purpose, and ensuring it was the right product.
“The vendors were also typically only interested in the larger deals,” he said. “Every vendor is after the top tier customer base, and that’s where you would get the vendor’s focus, because that is what will help them hit their quarterly numbers.”
The genesis of 24/7 Distribution can be traced to a gap that was identified back in 2005, where the distributor would consolidate the services it thought were essential to make a product successful in a marker.
“We were very selective on the types of products that we would invest in, so we effectively behave as a pseudo vendor and distributor,” Geagea said. “So we’re a distributor, but when you look under the bonnet, you will find that we act like a vendor in terms of services that we offer and support capabilities.”
Despite portraying the company in such as way, Geagea is quick to point out that 24/7 Distribution is 100 per cent channel only and does not go direct.
“We do a direct touch and work with customers directly, but we always fulfil transactions through a reseller,” he said.
In simple terms, what 24/7 Distribution saw was a place in the market for a “true” services-based distributor.
“There was this new technology called unified communications back then, and we thought that that would be a great opportunity for us to set up and invest into new technology that is disruptive, but is also an essential technology,” Geagea said.
With voice services and telephony having already been around for 30 or so years, the distributor could already see how that was going to evolve based on how people communicated, especially since communication is a priority one application in any business.
According to Geagea, what 24/7 Distribution saw was a unique need in the market, a product or service that is required by every organisation, and every customer.
“It is an evolution of the product from where it was 30 or so years ago into an IP-type world, so we wanted to capitalise on what Australia was going to go through,” he said. “Based on the results we’ve had, we feel confident that we have made the right decision.”
When asked what type of model 24/7 Distribution is running, the words Geagea uses to describe it include “interesting” and “somewhat disruptive”, especially when it is compared to traditional “bank-and-warehouse” distributors.
“The reason we have done that is because the technologies that we distribute are somewhat complex,” he said. “There’s a little bit of engineering skill set that is required to promote and sell them, and then to be able to install and support them.”
The distributor also did not want to follow trends or what other competitors may be doing. “We tend to steer away from commodity products, and instead focus on products and services that are complex and very valued by end users in terms of the efficiency and productivity that they deliver,” Geagea said.
However, he admits that those are things that do not come easy.
“You have to understand the business and work within their business processes, implement a solution that delivers cost saving to efficiency, and productivity alongside that,” he said.
So what did 24/7 Distribution do? It selectively chose manufacturers in markets similar to its own.
“First world countries, English speaking, and those that had a market share that didn’t resemble the one they had in Australia,” Geagea said. “Maybe that organisation did not see the economy here as opportune versus other economies.”
They were also the companies that had not made it across “the chasm” yet. “They were maybe focusing on the territories where they had success,” he said.
In situations such as those, it was up to 24/7 Distribution to take the initiative and make an investment on their behalf. “To set up all of the ingredients it takes to make a product successful in this market, and meet the same market share they have already reached in other economies such as the UK, US, Singapore, and so on,” Geagea said.
He added the distributor went to those economies for guidance, and also performed its own analysis based on what that vendor had achieved in market share in markets similar to its own.
With a business model in place, the next crucial step for 24/7 Distribution was selecting the right partners to work with.
Geagea said the distributor chose several vendors that had already done “phenomenally well” in markets similar to its own, and the distributor would back their investment in terms of what they had put into R&D.
“We would then take the market share they were sitting on in Australia to what the average market share that we worked out was across the market, and we would then compare the two,” Geagea said. In what Geagea characterises as one of the distributor’s strongest relationships to date, 24/7 Distribution carried out exchange programs with engineers, it brought the IP back into the country to be able to support the product, and it significantly invested into pre-sales support.
“We invested into a lead generation team that would honour those resellers that were loyal, and had made an investment so that it wasn’t just a one way street in orders coming our way as a distributor, unlike the other distributors out there,” he said.
For Geagea, it basically came down to 24/7 Distribution trying to help the vendor and build up their business in the process.
“Behind all of these investments, there is a significant level of process in terms of ensuring that we deliver the right results for resellers in terms of commitments that we give them,” he said. “But at the same time, we’re also making sure that we manage the conflict between different resellers and how customers are allocated by asking the right questions and digging deeper into the leads.”