Clocking up 22 years in business is major feat for many owners, particularly when faced with highs and lows in the changing face of the software distribution market.
The owner of Adelaide-based software distributor Saratoga Distribution, Ivar Stanelis, has seen through the market rise and fall, and changes ahead for the distribution space.
Stanelis doesn’t fluff around, simply saying it’s been a tough couple of years, but tells ARN’s Julia Talevski that his strategy of forming tight relationships with his entourage of resellers and diversifying the product line has resonated well for his Adelaide business.
Besides being involved in the software distribution business, Stanelis also harbours a passion for motorsport, having been involved in rallying for about 40 years.
Staying 22 years in business is impressive, what’s your strategy?
We work hard at trying to supply interesting products to as many resellers as we can. Sourcing products from everywhere and offering it at sharp prices, as well as same-day shipping and all the things that resellers want, but nonetheless, it has still been a tough gig in the last couple of years.
At the same time, we’ve had some good exclusive products like digital video software vendor, HonesTech, and a few other products that have resonated well with resellers such as small business accounting software, Cashflow Manager; Internet security vendor, Bullguard; multimedia software vendor, Cyberlink and Boogie Board.
In 22 years, we’ve been in two locations in Adelaide, but we ship nationally.
What inspired you to get started?Read more: Saratoga Distribution and Honestech partner
I was running a company called Double Impact in San Francisco and Australia. We had two offices and were trying to capitalise on the CD-Rom craze creating intellectual property for kids, counting tools, encyclopedias and so forth, we were supplying OEM to companies like IBM.
Then in the US, Double Impact fell over, in terms of not being able to meet payroll one day because one of our accounts defaulted with a company called ACS in Singapore, and we were stuck high and dry, and in America they shove you into Chapter 11 at 100 miles an hour, you don’t have time to blink.
I came back from America and started Saratoga. In America we made loads of contacts and buying IP from all sorts of people.
When we started Saratoga, our first big contract was with a company called Bet antivirus, it was the early days of the security market and for years it was great. We built on that as we went along.Read more: Saratoga offers Bullguard reseller incentive
If you look at our website today, we have a wide range of products and try to be a bit of one-stop shop for resellers. They can find all sorts of products they can add value to their customers with and that’s been chipping away nicely.
Adding value is really important.
Even though resellers are still doing it tough. There has been a lot of resellers falling over, we’ve had about 20 per cent turnover in the last two to three years, which is pretty high.
A lot of resellers now are just processing orders and ordering just–in-time, which is a big switch from the old days where they would stock product and work hard at selling it.Read more: Saratoga adds to line-up with NCH
How have you seen Saratoga transform its business into what it is today?
One of the strategies is keeping resellers as active as we can through slowly switching into offering downloadable products. We’re offering all sorts of things via download, no stock needed and resellers can order that just-in-time. They get a download location and we provide an unlock code.
It’s a strategy that’s gaining momentum, but box-shifting resellers are also still fairly strong in that some people still like to have a manual and a retail box. That side of the business has been ok, but declining and the download side is improving daily.
I can’t see us becoming a totally download business model. Online sellers are skewing things as well because they don’t have any loyalty to anyone, they are based on buying the cheapest they can and with small overheads, they can afford to be really competitive.
We’ve got loyal resellers and refreshing our product range all the time is a good strategy that works for our business.
What’s the strategy for the business in the years ahead?
It’s murky to me. We’ve been thinking about buying a couple of resellers to have a known and certain route to market, but what we’ve ended up doing is forming relationships with good resellers in each state, which are the bulk of our business.
Moving forward, the download business will get bigger. We may look at spinning that off into a different unit, gently move out of the software distribution business and move into accessories and gadgets.
Moving software around in boxes, the days are numbered. As a reseller, unless you add value to that software, you’re looking down the barrel. With products like security, it’s a lot easier to add value than when you’re buying a printing program.
In the future, we may look at downloadable licensed products like security, but I don’t want to move into the corporate market. We’ve made a good niche out of dealing with specialist, local and regional resellers and system integrators. They may not necessarily be the biggest stores or resellers, and many of them may only make orders once month, but it all adds up whether they spend $10,000 or $10.
About 80 per cent of our business derives from specialist and niche resellers and about 20 per cent comes from the bigger players.
The other part of our strategy is to keep things fairly lean, we have our own warehouse and keep it as lean as possible.
What are some of the lessons that you’ve learnt in business?
Always be fair and treat people the way you want to be treated. Don’t cut corners and be honest. That goes both ways between the seller and the buyer. There are many opportunities to cut corners, but we won’t do it. Reputation is also very important.
What else do you do outside of Saratoga?
I also run a consulting business for motorsport. I’ve been involved in rallying for 40 years and it’s a personal passion that has kind of spilled into a bit of a business where we organise events and so forth.