Mystery over channel schemes; partners perplexed

Be it festive season, new
year eve or the onset of winter, channel-centric schemes and programs
always seems to do the round, at almost every time of the year. With
a motive to increase sales revenue, the vendors create lucrative
schemes and multi-fold channel programs, but on the flip side some
partners feel, that such schemes are just a way to dump the products
in the market, while few cry foul over lack of commitment from
vendors. In some cases, the transparency and lack of fulfillment of
back-end incentives and rebates, are being questioned by partners
and resellers. From overseas trips to freebies, partners find it
tough to be in the vendor's 'elite club,' these days.

Inherent to IT products
distribution network, the zealot promotions sometime leads to under
pricing and unhealthy market practices. Tailored to gain mind share
of partners, the promotional programs with already-swollen targets
are gradually becoming a worry for IT traders. The irony is that most
of these schemes are offered by distributors, and vendors are
tend to be the executors, responsible for its fulfillment. A lot of
discrepancies usually crop up within the promotional period, or
whenever the time arrives to distribute goodies. In addition, the
upcountry partners and resellers feel neglected by vendors, and
settlement takes longer time in these regions.

The DQ Week has
done a random probe, and spoke to few channel partners and resellers
to get their take. Varanasi-based Udit Kumar Vasudeva, Director of
Life Computers, which is one of the largest sub-distributors in the
region said that, there is no clarity, and vendors usually nullify
their claims for a mere two to three percent shortfall in their
already-swollen sales targets. "Vendors usually create lucrative
schemes, but unfortunately, their area managers keep hold on freebies
and rebate vouchers, which causes discontent among the
reseller community in the region," he said. According to
Vasudeva, nearly 40 rebate vouchers, ranging between Rs 2,000 to Rs
5,000 are still pending with a vendor and the local manager do not
show any interest in fulfillment of those. Also, the claims get
nullified due to lack of vendor-driven automated process.

Sanjiv Jalan of Computer
Shoppe said, that the vendors keep on inflating targets, therefore it
becomes hard to maintain prices in the region. The vendors usually
dump products in the market, and convince partners on the pretext of
attractive schemes and rebates, which in turn forces the latter to
sell products below the MOP," said Jalan. Himanshu Kohli,
Director of Kanpur-based Comexcell Technologies, which is a
well-known sub-distributor in the region said that, the back-end
structure adopted by most of the vendors is faulty. “As a
corrective measure, Samsung has recently taken an initiative in
which it has abolished free additional TFTs on volume purchase, and
the company has cut down the product price,” informed Kohli.
Allahabad-based Shiv Shankar Singh, Director of Stek Systems said,
that the key problem is with multi-fold programs initiated by
vendors, and the partners have no option, but to sell products below
the market price.

Rupesh Sharma, Director of
Computer Touch and President of the Jalandhar Computer Dealers
Association (JCDA) said that most vendors pressurize partners to meet
sales targets, and schemes are designed to dump the products in the
market. "This is a major issue as the vendors usually keep
threatening the channel network to degrade them that eventually
shrinks their profit margins. The mechanism of partner schemes,
incentives and rebates is apparently faulty, and vendors generally
ignore the upcountry partners," said Sharma. Indrajit Sabharwal,
MD, Simmtronics Semiconductors feels that channel schemes should
depend upon the partner's potential and market size of the region
rather than centralized approach.