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At the
Summit 2010, Anil Gupta,
Director, Artek Enterprises shared why diversification is key for a
distributor to thrive in the business. In the IT distribution space,
distributors and sub-distributors have to often play by what the
principal vendors dictates to them. Finding other avenues for
business becomes key to ride the vagaries of business cycle
fluctuations. Gupta said, “Diversifying one's business is important
for stability as well as to spread risk.” Delivering a keynote
session at the
Summit 2010 in Kerala, Gupta touched upon
various aspects of what it means to strike the right balance by
having both solutions and distribution in one's business portfolio
and how this can help in scaling up the business. Some of the key
points highlighted by Gupta included:
- Distributors or sub-distributors should not depend on just few
principals - Dependency on just a few brands and product lines to be avoided
- Getting into the solutions side of the business helps give you
the control vs the vendor having more control in the distribution side - Usually higher level of margins in the solutions business
Gupta believes that it is best to have
a mix of both the distribution and solutions focus in one's business
portfolio. He quoted from his own experience, “When the recession
had affected the economy, there was a drop of around 15-20 percent in
the distribution business, but at the same time there was an increase
of opportunity in the solutions side by up to 40 percent, which was
because of major government investments into IT-based projects.”
Sharing a bit from a historical
perspective, Gupta said, “Around 20 years back, brands were not so
known and often the brands had to be pushed by the seller. This
prompted us to go to the customers directly with selling solutions.
Also, we started our own branding in the distribution side and by
positioning our own brands, we were able to start getting business,
which was also because of the fact that slowly with time we were able
to have a database ofÂ
referential cases to share from our solutions experience.”
Talking about some of the challenges to
look out for when diversifying into the solutions business, Gupta
highlighted, “The vendor expects you to carry his brand and
sometimes the brand you are carrying may not be the right fit for the
solution you wish to offer to the customer and often you will have to
sell the brand from a competing vendor. Also, often the very same
systems integrators you sell products to, are the ones you end up
competing with in the solutions business. Managing these challenges
both from a vendor and SI perspective becomes essential for a
distributor to achieve success in the solutions business.”
Finally, Gupta also touched upon
handling the conflict that is inherent when it comes to a distributor
expanding his business horizon to the solutions side of business.
“Sometimes you have to allow the competing SI to take the customer
account because ultimately it will indirectly result in more business
for you. On the other hand, one also needs to manage and console
one's own sales team who was chasing that particular account. It
becomes important that they are offered the same incentives as the
sales team involved in the distribution business, so that they do not
get demotivated,” signed off Gupta.
Disti
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