No matter what business you are in, profitability is the key to survival and the reseller market is no exception. In fact, in many ways the channel has a pressing need to stop and think long and hard today about ways to increase profitability in their businesses if they wish to make sure they have a business in the future. Increased competition and reduced margins have already impacted significantly on the channel and the trend will continue.
How does a reseller manage to reverse shrinking profits when there are external issues beyond their control? The US reseller market may provide some answers. That market recognised it was spending considerable time on non-profit generating activities, such as back-end administration, to the detriment of new business or pursuing projects that would provide greater income for the business.
As a reseller, how many times have you thought "if I could reduce the time spent on, for example, the accounts, I could use that resource and time to make sales calls or to concentrate on that new project I believe will be profitable"?
Increasingly, US resellers are turning to their distributor to assist them in making the running of their business simpler. Resellers recognised that distributors have many of the functions and business services that could enable them to significantly streamline and simplify their administration, thus creating opportunities to focus on profitability.
US resellers seem to have recognised that it simply does not make sense to spend money duplicating functions when margins are so tight. Cost savings have to be found wherever possible.
The Internet has made the streamlining of business administration possible. It is now feasible for resellers to leverage the investment made by distributors to cut down their day-to-day business processes which are repetitive, generate few if any revenues and are time consuming.
Distributors have spent considerable amounts of money constructing interactive Web sites that are now streamlined throughout their businesses. They offer downloadable customisable pricing, drop ship, Internet payment options and more.e-commerce is the key area of cost savings for a reseller. e-commerce makes sense for the IT channel because it is very efficient, reduces duplication, provides a more efficient management of transactions, improves the tracking of goods and reduces the chance of error.
Delivering the right product on time, with low overheads, is a requirement of every reseller, integrator or service business. Even when your focus is service delivery, the customer expectations often extend to product supply as a part of the solution. The more efficient and foolproof this process is, the lower the risk becomes of customer dissatisfaction. Additionally, the time to service transactional demands will also reduce.e-commerce can resolve the common problems that slow up business, waste staff time and ultimately hold up customer delivery times. Most importantly, e-commerce can assist businesses to focus on developing the profitable, value-add and service aspects of their business.
Many resellers have already recognised this value and those resellers who don't take up the challenge run the risk of being unable to compete in the market.
It does not make business sense to spend hours on activities which will only produce a minimum return in one area. Resellers need to consider the impact of their decisions on all areas of their business, including their administration area.
How then can resellers train staff, keep up-to-date with the latest technologies, service clients, offer competitive prices and still remain in business?
Resellers need to look at partnering with their distributors. Today distributors offer resellers many of the cost savings which will enable them to remain competitive. They also offer training courses, which enable resellers to obtain certification and add value to the business.
The good news for resellers is that the technology is available for businesses to achieve all these efficiencies today. At the end of the day, e-commerce is a much cheaper way to do business, plus it is much more efficient and accurate.
Resellers need to be really clear about what it is that will add value and concentrate on developing these activities. Then they should look at ways they can reduce the other business activities which are not core business functions. Partnering with distributors is one significant way this can be achieved.
Resellers also need to be lean so they can respond to the changes in the market quickly. It takes time to change your business focus. A successful business anticipates changes - "he who hesitates is lost".
Peter Masters is Marketing Manager of Express Data. Contact him at email@example.com