Hail the NDs

Both vendors and partners routinely lambast the national distributors for most of the problems that affect them; while that might be true in many cases, the fact of the matter is that these NDs are doing many good things too. Especially, in terms of using new-age technologies to improve their business performances. These biggies might have suffered in growing top line or are often being squeezed on margins, but they still play their roles in enhancing the country's overall distribution dynamics.

Ingram's B2B website for resellers had been a resounding success in improving transparency and reducing costs of doing both stock sales and run-rate business. Ingram took a lead on this in the Indian market and in FY10 30 percent of its business happened through this website. There was a consolidation of the sales organization with an order processing back office in Chennai making the team structure more efficient. Redington, on the other hand, has focused on improving distribution process efficiencies its Auto­mated Distribution Center (ADC) in Chennai went live and became fully operational; coupled with its state-of-the-art warehouse management system this significantly enhanced Redington's distribution process. There are plans to have these ADCs now in four metros for which Redington invested about Rs 150 crores. It now plans to complete the land purchase for the Mumbai ADC by year end and then commence construction of Kolkata and Delhi ADCs soon sequentially.

Another good measure done by these big NDs is to get into more niche products. That might have been done out of necessity-established volume products no more giving the margins have sort of forced the hands of these biggies to foray into niche value products. For Ingram, there was increasing focus on high value low volume businesses like Adobe, Autodesk, IBM software, Oracle, Fortinet, Juniper, Symantec, McAfee and Trend Micro that offered high margins. But it was newer areas like AIDC, PoS and surveillance that showed great promise with Ingram signing up a number of niche vendors. It was Redington's diversification into the non-IT business few years back that has paid off handsomely for it, with the non-IT business accountingfor 12 percent of its revenues in FY10-a 100 percent growth since FY09. Telecom business was the key with the exclusive relationship with Blackberry retail (especially in the unlocked space) witnessing good momentum.

Another good measure has been the increasing penetration of NDs into the smaller towns and cities. Small towns though were not on the agenda of companies a few years back but with the passé of time they have assumed enough importance for each company to sit up and take note of its existence. The channels that added tier-2 and tier-3 markets helped distributors who played their cards well to stay ahead. For deeper penetration into the C, D, E class channels vote for a requirement of good strength.

Realising the importance of these small towns that are growing at 60 percent, Rashi decided to increase it focus on these towns which collectively contributes 40 percent to its revenues. Small towns that were not on the agenda of national distributors a few years back came into focus in FY10. In FY09, Iris restructured its regional focus by declaring Delhi NCR as N1 and North India as N2 regions. This enabled the company in FY10 to penetrate smaller towns like Ludhiana, Chandigarh, Shimla, Ambala, Jammu better; this reflected in the 25 percent growth. Realizing the importance of these small towns where markets were growing faster, Rashi decided to increase its focus there and it collectively contributed 40 percent to its revenues.

(rajneeshd@cybermedia.co.in)